WESTPAC FULL YEAR 2013 INVESTOR UPDATE...2.5 17 2.2 1.6 FY10 FY11 FY12 FY13 FY10 80 7777 8380 84 20 23 17 16 FY11 FY12 FY13 Stable funding Wholesale funding

WESTPAC FULL YEAR 2013 INVESTOR UPDATE FIXED INCOME INVESTOR PRESENTATION

FOR THE YEAR ENDED 30 SEPTEMBER 2013

FEBRUARY 2014

Westpac Group FY13 Fixed Income Investor Update | February 2014 | Japan Roadshow 2

Disclaimer

The presentation was prepared and will be used by Westpac Banking Corporation (“Westpac”) for use in relation to the Westpac Japanese Yen Bonds (the “Bonds”) to be issued under its Shelf Registration Statement for the offering of bonds. The Bonds have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This presentation is not a prospectus under the Financial Instruments and Exchange Law of Japan.

This presentation contains forward-looking statements concerning the results, performance, achievements and financial position of Westpac, which are subject to risks, uncertainties, and assumptions and beliefs of Westpac’s management based on information currently available to it. Actual results, performance, achievements and financial position may differ materially from such forward-looking statements.

This presentation does not contain all relevant information relating to Westpac, and is qualified in its entirety by reference to the detailed information appearing in the Prospectus. For more information on the risks and uncertainties relating to Westpac, please refer to, and any investment decision to purchase the Bonds should be made solely on the basis of, information contained in the Shelf Registration Supplemental Prospectus and its reference documents related to the Bonds. The Shelf Registration Supplemental Prospectus will be available at the head offices of the joint lead managers of the Bonds.

This presentation is being presented solely for your information and is subject to change without notice. The information on Westpac in this presentation other than such forward-looking statements is accurate as of the date of this presentation. As to other information in this presentation, no representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, actuality, fairness, or completeness of the information presented.

Information on companies other than Westpac and certain other information described in this presentation has been extracted from publicly available information and third-party sources identified herein, and Westpac does not assure the accuracy, completeness or fairness of any such information.

This presentation does not constitute an offer or invitation to purchase or subscribe for any bonds of Westpac, and no part of this presentation shall form the basis of or be relied upon in connection with any contract or commitment.

The contents of this presentation may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose.


免責事項

本資料は、Westpac Banking Corporation（以下「ウエストパック」といいます。）により、ウエストパック円貨社債（社債の募集に関するウエストパックの発行登録書に基づき発行予定の社債であり、以下「本社債」といいます。）に関連して作成され、使用される資料です。本社債は、アメリカ合衆国1933年証券法（その後の改正を含みます。）に基づき現在登録されておらず、また今後も登録される予定はなく、アメリカ合衆国内において、募集又は売付けを行うことはできません（本社債が同法に基づき登録され又は同法での登録義務を免除される場合を除きます。）。本資料は、日本の金融商品取引法に基づく目論見書ではありません。

本資料は、ウエストパックの業績、経営成績、達成度及び財政状態に関する将来予想の記述を含んでおり、かかる記述は、リスク及び不確実性の影響を受けるものであって、かつ、本資料作成時点で入手可能な情報に基づくウエストパックの経営陣の仮定及び認識を反映したものに過ぎません。実際の業績、経営成績、達成度及び財政状態は、当該将来予想の記述と大幅に異なる可能性があります。

本資料には、ウエストパックに関する全ての関連情報が含まれているわけではなく、本資料の内容は、その全体について、目論見書に記載の詳細情報を参照することにより適切になるものです。ウエストパックのリスク及び不確実性に関するさらなる情報については、本社債に関する発行登録追補目論見書及びその参照書類に記載の情報をご参照ください。本社債購入に関する投資決定は、かかる発行登録追補目論見書及びその参照書類に記載の情報にのみ基づいて行われなければなりません。当該発行登録追補目論見書は、本社債の共同主幹事会社の本店にてご入手いただける予定となっております。

本資料はお客様への情報提供のためにのみ提示されるものであり、予告なしに変更されることがあります。本資料のウエストパックに関する将来予想の記述以外の情報は、本資料の使用日現在において正確なものです。本資料のその他の情報についての表明又は保証は、明示的又は黙示的を問わず一切なされておらず、また、本資料の情報につき正確性、現実性、公正性、完全性があると依拠することはできません。

本資料に記載されているウエストパック以外の企業にかかわる情報や、本資料に記載されたその他の情報の一部は、公開情報及び本資料にて特定されている第三者からの情報を引用したものであり、ウエストパックは、かかる情報の正確性、完全性又は公正性について何ら保証を行うものではありません。

本資料はウエストパックの社債の募集又は買取りもしくは応募の勧誘を構成するものではなく、本資料のいかなる部分も契約またはコミットメントの基礎を構成し、又はそれらに関連して依拠されるべきものではありません。

本資料の内容は、直接又は間接か、あるいはその全体か一部かを問わず、いかなる目的であれ、第三者に向けて、複製し、再配布し、交付することはできず、又は公表することもできません。

INDEX FY13 HIGHLIGHTS 4

ECONOMICS 19

AUSTRALIAN HOME LENDING 30

SECURITISATION 43

ADDITIONAL INFORMATION 47

APPENDICES 59

目次 FY13 HIGHLIGHTS 4

ECONOMICS 19

AUSTRALIAN HOME LENDING 30

SECURITISATION 43

ADDITIONAL INFORMATION 47

APPENDICES 59


FY13 highlights: higher earnings and a stronger balance sheet

FY13 Cash earnings results FY13 % Change

FY13 – FY12

Financial results

Cash earnings $7,097m 8

Statutory net profit $6,816m 14

Net operating income $18,833m 4

Expenses $7,710m 4

Impairment charges $847m (30)

Financial metrics

Earnings per share 228.9c 6

Net interest margin 2.15% (2bps)

Expense to income ratio 40.9% 12bps

Cash earnings return on equity 16.0% 51bps

Asset Quality

Net write-offs to avg loans annualised 25bps (7bps)

Total impaired assets to gross loans 67bps (18bps)

Total provisions to gross loans 73bps (9bps)

Impairment provisions to impaired assets 43.2% large

4,675

5,879

6,301

6,598

7,097

2009 2010 2011 2012 2013

2.33 2.22 2.22 2.17 2.15

2009 2010 2011 2012 2013

40.1 41.2 41.5

40.8 40.9

2009 2010 2011 2012 2013

Disciplined margin management Strong financial performance

Efficiency improving further

3,238

1,456

993 1,212

847

2009 2010 2011 2012 2013

High asset quality

Cash earnings ($m) Net interest margin (%)

Expense to income ratio (%) Impairment charges ($m)


2013年度ハイライト：収益の増加及びより堅固なバランスシート

2013年度現金収益 2013年度前年度比(%)

業績

現金利益 $7,097m 8

法定利益 $6,816m 14

純業務収益 $18,833m 4

営業経費 $7,710m 4

減損費用 $847m (30)

評価基準

一株あたり利益 228.9c 6

純利鞘 2.15% (2bps)

費用収益率 40.9% 12bps

現金収益ROE 16.0% 51bps

資産の質

年換算平均貸付金に対する正味貸倒償却費の比率

25bps (7bps)

総貸付金に対する減損資産合計の比率 67bps (18bps)

総貸付金に対する総引当金の比率 73bps (9bps)

減損資産に対する減損引当金の比率 43.2% large

4,675

5,879

6,301

6,598

7,097

2009 2010 2011 2012 2013

2.33 2.22 2.22 2.17 2.15

2009 2010 2011 2012 2013

40.1 41.2 41.5

40.8 40.9

2009 2010 2011 2012 2013

厳密なマージン管理好調な業績

効率はさらに改善

3,238

1,456

993 1,212

847

2009 2010 2011 2012 2013

高い資産の質

現金利益 ($m) 純利鞘 (%)

費用収益率 (%) 減損費用 ($m)


Westpac continues to deliver on key measures

7.5 8.1 8.4

9.1

11.6

FY10 FY11 FY12 FY13 FY13

16.1 16.0 15.5 16.0

FY10 FY11 FY12 FY13

Return on equity (%)

Basel 31 APRA Basel 2

APRA

Basel 2.5 APRA

Basel 3

Common equity tier 1 ratio (%)

Stressed assets to TCE (%)

3.2

2.5

2.2

1.6

FY10 FY11 FY12 FY13

80 77 83 84

20 23 17 16

FY10 FY11 FY12 FY13

Stable funding Wholesale funding <1 year

Total funding composition (%)

Strong capital generation

Common equity tier 1 ratio 11.6%1

FY13 ROE above 15%

Strong franchise

≥20% market share in home lending,

deposits and wealth segments2 in

Australia and New Zealand

Asset quality a strength

Stressed assets to TCE3 halved from

peak Financial Crisis level

Improved funding

Stable funding ratio4 84%

A$102bn market cap

The world’s 11th largest bank by

market cap5

1. Calculated on a BCBS Basel III fully harmonised basis. See Appendix 3 for more information. 2. Sources: APRA Banking Statistics September 2013, Plan for Life June 2013, All Master Funds Admin; RBNZ

September 2013. 3. TCE is Total Committed Exposures. 4. SFR is the stable funding ratio calculated on the basis of customer deposits + wholesale funding with residual maturity greater than 12 months + equity +

securitisation, as a proportion of total funding. 5 Source: IRESS, CapitalIQ and www.xe.com based in US dollars. As at 30 September 2013.


ウエストパックは主要基準で継続的に成果を上げている

7.5 8.1 8.4

9.1

11.6


16.1 16.0 15.5 16.0

FY10 FY11 FY12 FY13

ROE (%)

Basel 31 APRA Basel 2

APRA

Basel 2.5 APRA

Basel 3

普通株等Tier1資本比率 (%)

TCEに対するストレスアセット (%)

3.2

2.5

2.2

1.6

FY10 FY11 FY12 FY13

80 77 83 84

20 23 17 16

FY10 FY11 FY12 FY13

Stable funding Wholesale funding <1 year

調達構成 (%)

堅固な資本形成

普通株等Tier1資本比率11.6%1

2013年度の ROEは15％以上

健全なフランチャイズ

オーストラリア、ニュージーランドにおける住宅ローン、預金、資産管理部門のマーケットシェアは20％以上 2

資産の質は強み

TCEに対するストレスアセットは金融危機

のピーク時から半減3

資金調達の改善

安定調達比率4 84%

時価総額1,020億豪ドル

時価総額では世界第11位5 の銀行

1. Calculated on a BCBS Basel III fully harmonised basis. See Appendix 3 for more information. 2. Sources: APRA Banking Statistics September 2013, Plan for Life June 2013, All Master Funds Admin; RBNZ

September 2013. 3. TCE is Total Committed Exposures. 4. SFR is the stable funding ratio calculated on the basis of customer deposits + wholesale funding with residual maturity greater than 12 months + equity +

securitisation, as a proportion of total funding. 5 Source: IRESS, CapitalIQ and www.xe.com based in US dollars. As at 30 September 2013.

80 77 83 84

20 23 17 16

FY10 FY11 FY12 FY13

安定調達ホールセール調達（1年以内）

Westpac Group FY13 Fixed Income Investor Update | February 2014 | Japan Roadshow

Clear strategic priorities managed in a balanced way

6

Strength A strong company Capital within preferred

range of 8.0% - 8.5%

Target stable funding

ratio >75%

Growth Investment driven

Higher growth in target

segments, including

Deposits, Asia, SME,

Trade and Natural

Resources

Productivity Sector leading

Maintain expense to

income ratio

below peers

Return Maintain discipline

Maintain strong ROE

Maintain dividend path

Remain strong

Targeted growth

Customer relationships

Materially simplify

One team

1

2

3

4

5


明確な戦略上のプライオリティ

6

強み健全な銀行

資本は8.0% - 8.5%に収め

られており目標安定調達比率は75%超

成長投資中心

預金、アジア、中小企業、貿易、天然資源、などの分野でより高い成長

生産性業界トップ

費用対収益比率は他行と比べ最も低いレベルを

維持

利益規律を維持

高いROEを維持

配当を維持

引き続き健全な銀行

目標とする成長率

顧客との関係性

簡素化

ワン・チーム

1

2

3

4

5


Institu

tio

nal

NZ

A

ustr

alia

n F

ina

ncia

l S

erv

ices

7

All divisions and brands contributing to growth

Westpac New Zealand

One of New Zealand’s largest banks,

providing banking and wealth

services to consumers, businesses

and institutions

• FY13 cash earnings NZ$770m

• Up 9% on FY12

• Strong franchise delivering,

improvement in portfolio quality

32

20 10

23

9

2 3

Westpac RBB

St.George

BT

WIB

New Zealand

Pacific Banking

Group (inc. Treasury)

FY13 Cash earnings by division (%)

1. FUM is Funds Under Management and FUA is Funds Under Administration.

AFS MyBank customer numbers (‘000)

1,632

1,668

1,698

1,743

1H12 2H12 1H13 2H13

MyBank customers

have their key

transaction account

with the Westpac

Group, are frequent

transactors and

have 2 or more

other key financial

needs met

Westpac Retail & Business

Banking

Australian retail and business

banking for consumers, SMEs and

commercial customers under the

Westpac brand

• FY13 cash earnings $2.3bn

• Up 9% on FY12

• Strong franchise continuing to deliver;

customers increasing

St.George Banking Group

Australian retail and business

banking under the St.George,

BankSA, Bank of Melbourne and

RAMS brands


• Up 17% on FY12

• All brands contributing positively;


BT Financial Group

Wealth division with $76bn funds

under management and $103bn

funds under administration at 30

September 2013

• FY13 cash earnings $737m

• Up 13% on FY12

• Strong performance from asset

management, advice and insurance;

continuing good inflows onto platforms

Westpac Institutional Bank

Leading Australasian wholesale

bank, with branches and

representative offices in Australia,

NZ, US, UK and Asia


• Up 11% on FY12

• Strong customer flows particularly in

Debt Markets, significant


88 96

103

57 66

76

2H12 1H13 2H13

FUA FUM

BT FUM and FUA1 ($bn)


Institu

tio

nal

NZ

A

ustr

alia

n F

ina

ncia

l S

erv

ices

7

全ての部署とブランドが成長に寄与

ウエストパック・ニュージーランド：

ニュージーランド最大規模。消費者顧客、法人顧客に対しバンキング、資産運用サービスを提供

• 2013年度の現金利益は770百万ニュージーランドドル

• 前年度比 9%増

• フランチャイズが強くポートフォリオの質を向上

32

20 10

23

9

2 3

Westpac RBB

St.George

BT

WIB

New Zealand

Pacific Banking


2013年度部門別現金収益 (%)

1. FUM is Funds Under Management and FUA is Funds Under Administration.

AFS MyBank利用顧客数 (‘000)

1,632

1,668

1,698

1,743

1H12 2H12 1H13 2H13

MyBankの顧客はメインの口座をウエストパックで開き、取引が頻繁である

ウエストパック・リテール及びビジネスバンキング：

オーストラリアの消費者顧客、中小企業顧客、商業顧客向けのリテール及びビジネスバンキング

• 2013年度の現金利益は23億豪ドル

• 前年度比 9%増

• フランチャイズが強く顧客が増加

セントジョージ・バンキング・グループ：

セントジョージ、バンクSA、バンクオブメルボルン、RAMSブランド下のオーストラリアのリテール及びビジネスバンキング


• 前年度比17%増

• 全てのブランドがプラスに貢献し、ポートフォリオの質を改善

BTファイナンシャル・グループ：

ウエストパックのオーストラリア資産運用部門は2013年9月末現在、運用資産が760億豪ドル、管理資産が1,030億豪ドル

• 2013年度の現金利益は737百万豪ドル


• 資産管理及び保険販売で好成績。プラットフォームへのよい流れを維持

ウエストパック・インスティテューショナル・バンク：

オーストラリア最大級のホールセールバンクで、オーストラリア、ニュージーランド、アメリカ、イギリス、アジア諸国に支店、代理店を構える



• 特に債券市場への顧客の流入があり、ポートフォリオの質を大幅に改善

88 96

103

57 66

76

2H12 1H13 2H13

FUA FUM

BT 運用資産及び管理資産1 (10億豪ドル)


40.9

44.8 45.0 44.0

Westpac Peer 1 Peer 2 Peer 3

Setting Westpac apart – Domestic customer focus, efficiency and balance sheet strength

1 Source: Company Reports. Westpac, Peer 1 and Peer 3 as at 30 September 2013. Peer 2 as at 30 June 2013. 2 See Appendix 4 for Wealth penetration metrics provider details 3 Short term funding includes

Central Bank deposits and long term wholesale funding with a residual maturity less than 1 year.

8

9.1

8.5 8.2

8.4


16 18

20 24


16

26 20

38


88 67

87 76

10

15

9

8

2

17

4

15


Asia, Pacific, Europe & Americas

New Zealand

Australia

Total income by geography1 (%) Expense to income ratio1 (%)

Impairment charges to average loans

annualised1 (bps)

Short term funding to total funding including

equity1,3 (%) Common equity ratio1 (APRA Basel III) (%)

Leader in efficiency

Risk management a competitive advantage Lowest short term funding of peers

Clear focus on Australia and New Zealand

Capital levels ahead of peers

21.2%

14.9%

13.9%

18.9%

14.4%

Mar-

10

Sep-1

0

Mar-

11

Sep-1

1

Mar-

12

Sep-1

2

Mar-

13

Sep-1

3

Westpac R&BB St.George

Peer 1 Peer 2

Peer 3

Wealth penetration2 leads sector (%)


40.9

44.8 45.0 44.0


ウエストパックを際立たせる国内顧客への注力、効率、バランスシートの強さ

1 Source: Company Reports. Westpac, Peer 1 and Peer 3 as at 30 September 2013. Peer 2 as at 30 June 2013. 2 See Appendix 4 for Wealth penetration metrics provider details 3 Short term funding includes

Central Bank deposits and long term wholesale funding with a residual maturity less than 1 year.

8

9.1

8.5 8.2

8.4


16 18

20 24


16

26 20

38


88 67

87 76

10

15

9

8

2

17

4

15


Asia, Pacific, Europe & Americas

New Zealand

Australia

地域別収益1 (%) 費用収益率1 (%)

年間平均総貸付金に対する減損費用の比率1 (bps) 株式を含む総調達に対する短期調達比率1,3 (%) 普通株資本比率1 (APRA バーゼル III) (%)

効率面で業界トップ

リスクマネジメント能力は競争力に短期資金調達の割合は他行より低い

オーストラリア及びニュージーランドに注力

資本レベルは他行を上回る

21.2%

14.9%

13.9%

18.9%

14.4%

Mar-

10

Sep-1

0

Mar-

11

Sep-1

1

Mar-

12

Sep-1

2

Mar-

13

Sep-1

3

Westpac R&BB St.George

Peer 1 Peer 2

Peer 3

資産管理部門のマーケットシェア1位2 (%)


• On 11 October 2013 Westpac entered into an agreement to acquire Lloyds

Banking Group’s Australian business for $1.45bn. The acquisition was

completed on 31 December 2013 (no impact on FY13 results)

• $8.4bn asset base, risk weighted assets of $9.1bn

• Assets represent 1.2% of Westpac’s asset base, lifting Westpac Group’s

Australian business portfolio by around 7%

• Given the Group’s strong capital and funding position, the transaction was

financed from internal resources and within existing funding plans

(approximately $8bn)

• Assets clearly aligned to target segments of SME and Corporate

• Grows customer base and enhances ability to deepen existing relationships

through expanded operating lease capability

• Asset quality considered to be in line with similar Westpac assets

• Strong cultural alignment between Lloyds and WIB/ St.George teams

• Clear integration plan in place

Completed acquisition of Lloyds Banking Group’s Australian

businesses

9

Excellent strategic fit

Equipment

finance

• $2.9bn in lease receivables

– $1.9bn SME (to be managed within St.George)

– $1.0bn corporate (will be managed within WIB)

• 62,000 corporate/business customers

• Low risk motor vehicle and machinery assets associated

with waste management, mining and transport industries

• Adds operating lease capability to WIB

Motor

Vehicle

Finance

• $3.9bn in assets

– $0.7bn dealer finance

– $3.2bn personal car finance

• 343 motor dealerships

• 151,000 consumer customers

• Complementary to existing St.George auto finance

portfolio, providing geographic diversity with more

business in rural/regional areas

Corporate

loan

portfolio

• $1.6bn in high quality corporate loans. Additional $1.1bn in

undrawn facilities

• 28 high quality corporates, with stressed assets previously

sold

• Assets transferred to WIB, with Westpac having a

relationship with approximately 80% of customers

• Portfolio expected to run-down over next 3 years

Summary of businesses acquired

Transaction is value enhancing to Westpac

• Price of $1.45bn includes approximately $260m of goodwill

• Price to NTA 1.22x

• Including synergies, businesses are expected to add at least $100m to Westpac’s FY15 Cash Earnings

• Businesses (including goodwill) expected to generate an ROE ahead of the Group’s 11% cost of capital and so adds to shareholder value

• Expected to be EPS positive by the end of FY14


• 2013年10月11日、ウエストパックはロイズバンキンググループのオーストラリア事業を14.5億豪ドルで取得することに合意し、2013年12月31日に買収は完了（2013年度の業績への影響はなし）

• 84億豪ドルの資産ベースでリスク加重資産は91億豪ドル

• 資産はウエストパックの資産ベースの1.2%を占め、ウエストパックグループのオーストラリア事業のポートフォリオを約7%押し上げた

• グループのキャピタルポジション、ファンディングポジションが強いため、この取得の資金調達は内部のリソースでまかなわれ、既存のファンディングプラン内で行った（約80億豪ドル）

• 資産はターゲットとする中小企業及び法人セグメントに合致

• 顧客ベースを拡大し、オペレーティングリース能力が強化されることで既存の顧客関係もより深まる

• 資産の質はウエストパックと同等と思われる

• ロイズ及びウエストパックIB、セントジョージチームの文化的協力

• 明確な統合プランの実施

ロイズバンキンググループのオーストラリア事業を取得

9

戦略的適合

設備融資事業

• 資産29億豪ドル

– 中小企業19億豪ドル（セントジョージが管理）

– 法人10億豪ドル（ウエストパックIBが管理）

• 62,000名の個人及び商業顧客

• 廃棄物管理、鉱業、輸送産業に関連した自動車及び機械類の資産は低リスク

• ウエストパックIBのオペレーティングリース能力を拡大

自動車融資事業

• 資産39億豪ドル

– ディーラー融資に7億豪ドル

– 自動車融資に32億豪ドル

• 343 件の自動車ディーラー

• 151,000名の個人及び商業顧客

• 既存のセントジョージの自動車融資事業を補助するため、拠点を増やし地理的な面での多様性を付加する

法人融資ポートフォリオ

• 質の高い法人融資額が16億豪ドル。11億豪ドルは未使用枠

• ストレスアセットを売却した28件の法人顧客

• 資産はウエストパックIBに移管し、ウエストパックは約8

割の顧客を引き継ぐ

• ポートフォリオは今後3年以内に縮小する見込み

取得した事業の概要

ウエストパックに対して価値ある案件

• 取得額の14.5億豪ドルには、約2.6億豪ドルののれん代も含む

• 価格はNTAの1.22倍

• シナジー効果も含めると、2015年度の現金収益は各事業合計で1億豪ドル以上増加の見通し。

• のれん代も含め、事業全体でグループの調達コスト11%を上回るROEを達成し、株主価値も上昇すると思われる

• 2014年度までにはEPSはプラスになる見込み


Strong capital generation in FY13

10

Key capital ratios (%) FY12 FY13 Preferred range

APRA Basel 2.5 APRA Basel III

Common equity tier 1 ratio 8.4 9.1 8.0% - 8.5%

Additional tier 1 capital 1.9 1.6

Tier 2 capital 1.4 1.6

Total regulatory capital ratio 11.7 12.3 11.5% - 12.0%

Risk weighted assets $298bn $307bn

FY12 FY13

Common equity tier 1 ratio (BCBS1 Basel III) 10.6 11.6

1 Basel Committee on Banking Supervision. 2 Recalculated on an APRA Basel III basis. 3 Recalculated on a full harmonised Basel III basis.

Common equity tier 1 capital ratio (% and bps)

27

79

94

FY11 FY12 FY13

Increase in common equity tier 1 ratio2

(bps)

8.38 70 8.16

231

2 8 17 9.10

126 77 21 22 11.56

(51) (31)

(1) (9)

(164)

30 S

ept

12

AP

RA

Basel

2.5

50/5

0

deductions

now

100%

RW

A

changes

50/5

0

deductions r

isk

weig

hte

d

Equity

in

vestm

ents

Accru

ed

div

idend

30 S

ept

12

AP

RA

Basel III

Cash

earn

ings

Div

idends

paid

out

RW

A

movem

ent

St.G

eorg

e t

ax

adju

stm

ents

Oth

er

30 S

ep 1

3

AP

RA

Basel III

Concessio

nal

thre

shold

s

Mort

gage 2

0%

LG

D flo

or

IRR

BB

RW

A

Oth

er

30 S

ep 1

3

Basel III

22bps 94bps 246bps

2

3

Added 200bps

to capital in

last 3 years


2013年度の強固な資本基盤

10

主要資本比率(%) FY12 FY13 望ましいレンジ

APRA Basel 2.5 APRA Basel III

普通株等Tier1資本比率 8.4 9.1 8.0% - 8.5%

追加的な Tier 1 資本 1.9 1.6

Tier 2 資本 1.4 1.6

自己資本比率 11.7 12.3 11.5% - 12.0%

リスク加重資産 $298bn $307bn

FY12 FY13

普通株等Tier1資本比率 (BCBS1 Basel III) 10.6 11.6

1 Basel Committee on Banking Supervision. 2 Recalculated on an APRA Basel III basis. 3 Recalculated on a full harmonised Basel III basis.

普通株等Tier1資本比率 (% 及び bps)

27

79

94

FY11 FY12 FY13

普通株等Tier1資本比率の増加2 (bps)

8.38 70 8.16

231

2 8 17 9.10

126 77 21 22 11.56

(51) (31)

(1) (9)

(164)

30 S

ept

12

AP

RA

Basel

2.5

50/5

0

deductions

now

100%

RW

A

changes

50/5

0

deductions r

isk

weig

hte

d

Equity

in

vestm

ents

Accru

ed

div

idend

30 S

ept

12

AP

RA

Basel III

Cash

earn

ings

Div

idends

paid

out

RW

A

movem

ent

St.G

eorg

e t

ax

adju

stm

ents

Oth

er

30 S

ep 1

3

AP

RA

Basel III

Concessio

nal

thre

shold

s

Mort

gage 2

0%

LG

D flo

or

IRR

BB

RW

A

Oth

er

30 S

ep 1

3

Basel III

22bps 94bps 246bps

2

3

直近3年間で資本は200bps増加


14.7 14.5

12.3 12.3

11.6 11.5 11.4 11.2 11.2 11.0 10.8 10.8 10.7 10.5

10.3 10.1 10.1 10.0 9.6 9.6

9.3 9.3 9.2 9.0 8.9 8.9 8.8 8.6 8.6 8.5

Sw

ed

ba

nk

SH

B (

Sve

nska

)

Unite

d O

ve

rse

as

Ba

nk

SE

B

Westp

ac

Dan

ske

Ba

nk

DB

S

Ers

te

OC

BC

CB

A

DnB

AN

Z

Sta

nd

ard

Cha

rte

red

HS

BC

NA

B

Citic

orp

BN

P P

ari

ba

s

Nord

ea

Ba

nk o

f A

me

rica

Ba

nk o

f M

on

tre

al

CIB

C

JP

Mo

rga

n C

ha

se

Roya

l B

an

k o

f C

an

ad

a

UB

I B

an

ca

Ba

nk o

f N

ova

Sco

tia

TD

Ba

nk

Inte

sa

Sa

np

ao

lo

Com

me

rzb

an

k

BO

Q

Wells

Fa

rgo

Basel III minimum 7.0%

Fully harmonised common equity tier 1 ratio above local peers

and at the upper end of global peers

Global peer comparison of Basel III pro-forma common equity tier 1 ratios1 (%)

11

1. Source: Company data, Credit Suisse estimates based on latest reported data as at October 2013. Australian major banks based on last reporting date.


14.7 14.5

12.3 12.3

11.6 11.5 11.4 11.2 11.2 11.0 10.8 10.8 10.7 10.5

10.3 10.1 10.1 10.0 9.6 9.6

9.3 9.3 9.2 9.0 8.9 8.9 8.8 8.6 8.6 8.5

Sw

ed

ba

nk

SH

B (

Sve

nska

)

Unite

d O

ve

rse

as

Ba

nk

SE

B

Westp

ac

Dan

ske

Ba

nk

DB

S

Ers

te

OC

BC

CB

A

DnB

AN

Z

Sta

nd

ard

Cha

rte

red

HS

BC

NA

B

Citic

orp

BN

P P

ari

ba

s

Nord

ea

Ba

nk o

f A

me

rica

Ba

nk o

f M

on

tre

al

CIB

C

JP

Mo

rga

n C

ha

se

Roya

l B

an

k o

f C

an

ad

a

UB

I B

an

ca

Ba

nk o

f N

ova

Sco

tia

TD

Ba

nk

Inte

sa

Sa

np

ao

lo

Com

me

rzb

an

k

BO

Q

Wells

Fa

rgo

バーゼル3要件7.0%

バーゼル3完全移行後の普通株等Tier1資本比率は国内トップ、全世界でもトップレベル

プロフォーマベースのバーゼル3 普通株等Tier1資本比率1 (%)

11

1. Source: Company data, Credit Suisse estimates based on latest reported data as at October 2013. Australian major banks based on last reporting date.


Westpac has built a strong and sustainable funding profile

12

44

58 61

5

7 7

1

2 2

10

11 9

4

5 5 20

10 9 16

7 7

FY08 FY12 FY13

Wholesale Onshore <1Yr

Wholesale Offshore <1Yr

Wholesale Onshore >1Yr

Wholesale Offshore >1Yr

Securitisation

Equity

Customer deposits

2

SFR1 64% SFR1 84% SFR1 83%

1 SFR is the stable funding ratio calculated on the basis of customer deposits + wholesale funding with residual maturity greater than 12 months + equity + securitisation, as a proportion of total funding. 2 2008 does not include St.George. 3. Equity excludes FX translation, Available for Sale Securities and Cash Flow Hedging Reserves. 4 Private securities include Bank paper, RMBS, and Supra-nationals. 5 Includes long term wholesale funding with a residual maturity less than 1 year.

3

Funding composition by residual maturity (%)

7

39 42 44

102

38

31 25 28

33 43 54

FY08 FY11 FY12 FY13 Short term outstanding debt FY13

Self securitisation

Private securities and government guaranteed paper

Cash, government and semi-government bonds

Liquid assets ($bn)

45

126 110

103

5

4

• Stable funding ratio1 (SFR) 84%, up 99bps

• Customer deposits 61% of total funding, up 290bps

• Continued strong growth in customer deposits, up $35bn over the year,

enabled the Group to:

– Fully fund loan growth over the year – 377bps improvement in customer

deposit to loan ratio to 71.4%

– Buy back $8bn in Government-guaranteed term debt

– Limit wholesale funding issuance

– Increase funded liquid assets

• The Group’s liquidity position has also been supported by an $11bn

increase in self-securitised assets

2


持続可能な資金調達プロファイルを構築

12

44

58 61

5

7 7

1

2 2

10

11 9

4

5 5 20

10 9 16

7 7

FY08 FY12 FY13

Wholesale Onshore <1Yr

Wholesale Offshore <1Yr

Wholesale Onshore >1Yr

Wholesale Offshore >1Yr

Securitisation

Equity

Customer deposits

2

SFR1 64% SFR1 84% SFR1 83%

1 SFR is the stable funding ratio calculated on the basis of customer deposits + wholesale funding with residual maturity greater than 12 months + equity + securitisation, as a proportion of total funding. 2 2008 does not include St.George. 3. Equity excludes FX translation, Available for Sale Securities and Cash Flow Hedging Reserves. 4 Private securities include Bank paper, RMBS, and Supra-nationals. 5 Includes long term wholesale funding with a residual maturity less than 1 year.

3

残存期間別の資金調達内訳 (%)

7

39 42 44

102

38

31 25 28

33 43 54

FY08 FY11 FY12 FY13 短期調達残高

FY13

自己証券化

私募証券・政府保証債

現金・政府債・純政府債

流動性資産 (10億豪ドル)

45

126 110

103

5

4

• 安定調達比率1 (SFR)は99bps 増加して84%

• 顧客預金は290bps増加して調達額全体の61%

• 顧客預金は年間で350億豪ドル増と伸び続けており、グループに以下をもたらした：

– 年間のファンドローンの伸びは377bpsとなり、顧客の預貸率が71.4％に改善

– 政府保証付タームデットで80億豪ドル分の買戻し

– ホールセール発行を制限

– 流動性資産の増加

• 自己証券化資産が110億豪ドル増加したことも、グループの流動性ポジションを支えた

2

ホールセール・オンショア

（1年以下）

ホールセール・オフショア

（1年超）

ホールセール・オンショア

（1年以下）

ホールセール・オフショア

（1年超）

証券化

株式3

顧客預金


• Customer deposits grew strongly over the year, up $35bn or 10%

• Focus on growing deposits with higher LCR value

– Particularly strong growth in Australian household deposits

o 1.3x system1

o Increased market share over the year by 45bps to 23%1

– Launched Corporate Evergreen product in February 2013 – an

investment account with a market-linked variable interest rate and

residual maturity date

o Over $1bn in deposits since launch

o Winner 2013 Australian Business Award for Product Innovation

o NoticeSaver, the commercial and SME version of Evergreen, made

available through retail banking distribution channels in FY13

Above system growth in customer deposits

13

1 APRA Banking Statistics, September 2013 2 Mortgage offset accounts are included in transaction accounts.

166 161 165

40 49 55

59 63 68

83 87 95

348 360 383

2H12 1H13 2H13

Term deposits Savings Online Transaction

43%

14%

18%

25%

Customer deposit composition2 ($bn and %)

1.1 1.1 1.2 1.2 1.3

22.3 22.4 22.6

22.8 23.0

20.00 20.20 20.40 20.60 20.80 21.00 21.20 21.40 21.60 21.80 22.00 22.20 22.40 22.60 22.80 23.00 23.20

Sep-11 Mar-12 Sep-12 Mar-13 Sep-13

System multiple (rhs) Westpac household deposits market share

Australian household deposits market share1 (%) and

growth compared to system1 (times)

Westpac deposit growth funding loan growth

4.3

8.6 8.6

21.3

9.8

27.8

11.9

23.0

11.2

3.0

6.6

12.4 9.5

8.3 6.7

15.0 57.2

58.7 59.6 62.5

63.2 67.6

69.0 71.4

40

45

50

55

60

65

70

0

5

10

15

20

25

30

1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13

Customer deposit growth ($bn)

Net loan growth ($bn)

Customer deposit to loan ratio (%)


• 顧客預金は年間で大幅に拡大、10%増の350億豪ドル

• 流動性カバレッジ比率はより高くしつつ、預金拡大にフォーカス

– オーストラリア家計預金に特に大きな伸び

o 平均成長1.3倍の成長率1

o マーケットシェアは1年で45bps 拡大し23%に1

– 法人向けの投資用口座Evergreen を2013年2月に立ち上げ –市場連動型変動金利と満期日を設定した口座

o 立ち上げ以降10億豪ドル以上の預金額

o 2013年オーストラリアビジネスアワード、プロダクトイノベーション部門受賞

o 上記口座の商業及び中小企業向け製品NoticeSaver が2013年度リテールバンキングを通じて立ち上げ

顧客預金は平均的成長を上回る

13

1 APRA Banking Statistics, September 2013 2 Mortgage offset accounts are included in transaction accounts.

166 161 165

40 49 55

59 63 68

83 87 95

348 360 383

2H12 1H13 2H13

Term deposits Savings Online Transaction

43%

14%

18%

25%

顧客預金の内訳2 (10億豪ドル、%)

1.1 1.1 1.2 1.2 1.3

22.3 22.4 22.6

22.8 23.0

20.00 20.20 20.40 20.60 20.80 21.00 21.20 21.40 21.60 21.80 22.00 22.20 22.40 22.60 22.80 23.00 23.20

Sep-11 Mar-12 Sep-12 Mar-13 Sep-13

平均的成長(右軸) ウエストパックの家計預金マーケットシェア

オーストラリアの家計預金マーケットシェア1 (%) 及び平均的成長を上回る伸び1 (倍)

ウエストパック預金、貸出の伸び

4.3

8.6 8.6

21.3

9.8

27.8

11.9

23.0

11.2

3.0

6.6

12.4 9.5

8.3 6.7

15.0 57.2

58.7 59.6 62.5

63.2 67.6

69.0 71.4

40

50

60

70

0

5

10

15

20

25

30

1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13

顧客預金の伸び ($bn)

純貸出の伸び ($bn)

純貸出に対する顧客預金の比率 (%)


Wholesale funding significantly lower;

provides capacity for growth

14

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. Contractual maturity date for hybrids and callable subordinated instruments is the first scheduled conversion date or call date for the purposes of this disclosure. Perpetual sub-debt has been included in >FY18 maturity bucket. Maturities exclude securitisation amortisation. 2 Includes long term wholesale funding with a residual maturity less than 1 year. 3. Short term funding includes Central Bank deposits and long term funding with a residual maturity less than 1 year. 4. Source: Westpac, Company reports. Peer 1 and Peer 2 as at 30 September 2013, Peer 2 as at 30 June 2013. 5 Sources: Westpac, APRA Banking Statistics September 2013

36

22 20

23

17 16

FY08 FY09 FY10 FY11 FY12 FY13

Less reliance on short term funding

• $22bn term debt issued in FY13

• Includes $2.3bn in Tier 1 and Tier 2 capital

securities

• Weighted average maturity of new issuance

4.8 years (4.3 years FY12)

• Well positioned for FY14

– Maturities actively managed - $8 billion of

AUD and USD Government-guaranteed

debt bought back in FY13

– Issued $11.5bn year-to-date 2014

– Able to fund acquisition of Lloyds’

Australian businesses from internal

resources

102 109

140 158

16 18

20

24


FY09 FY10 FY11 FY12 FY13 FY14 ytd FY14 FY15 FY16 FY17 FY18 >FY18

Covered Bond Hybrid Senior Govt Guaranteed Sub Debt

Issuance Maturities

12 15

19 19 22

33

25 24 23

11

Term debt issuance and maturity profile1 ($bn)

43 45

Short term funding3,4 ($bn)

Short term funding to total funding including equity3,4 (%)

Short term funding to total funding including equity2 (%)

Lowest short term funding of peers

13 15 12 15

17

26

24

29

Peer 1 Peer 2 Peer 3 Westpac

Issued ($bn)

Remaining capacity (8% cap & overcollateralisation) ($bn)

44

37 33 34


Australian covered bond issuance5

% Capacity utilised (%)


ホールセール調達は大幅に減少し成長に寄与

14

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. Contractual maturity date for hybrids and callable subordinated instruments is the first scheduled conversion date or call date for the purposes of this disclosure. Perpetual sub-debt has been included in >FY18 maturity bucket. Maturities exclude securitisation amortisation. 2 Includes long term wholesale funding with a residual maturity less than 1 year. 3. Short term funding includes Central Bank deposits and long term funding with a residual maturity less than 1 year. 4. Source: Westpac, Company reports. Peer 1 and Peer 2 as at 30 September 2013, Peer 2 as at 30 June 2013. 5 Sources: Westpac, APRA Banking Statistics September 2013

36

22 20

23

17 16

FY08 FY09 FY10 FY11 FY12 FY13

短期調達の減少

• 2013年度、220億豪ドルのタームデットを発行

• 上記には23億豪ドルのTier1及びTier2資本証券を含む

• 新発債の加重平均年限は4.8年（2012年度は4.3

年）

• 2014年度に向け、状況は良好

– アクティブな償還管理 - 2013年度、豪ドル建て及び米ドル建て政府保証債80億豪ドル相当を買い戻し

– 2014年年初より115億豪ドルを発行

– ロイズのオーストラリア事業取得に必要な資金を内部で調達可能

102 109

140 158

16 18

20

24


FY09 FY10 FY11 FY12 FY13 FY14 ytd FY14 FY15 FY16 FY17 FY18 >FY18

カバードボンドハイブリッド証券シニア債政府保証債劣後債

Issuance Maturities

12 15

19 19 22

33

25 24 23

11

タームデット発行と償還プロファイル1 (10億豪ドル)

43 45

短期調達額3,4 ($bn)

全体における短期調達の割合3,4 (%)

全体における短期調達の割合2 (%)

短期調達額は他行より小さい

13 15 12 15

17

26

24

29


発行額 ($bn)

残存キャパシティ (8%の上限と超

過担保) ($bn)

44

37 33 34


豪州カバードボンド発行5

キャパシティ利用度(%)


Issuance capabilities delivering diversity in new term funding

15

AUD public, 32

AUD private, 10

USD public, 32

USD private, 11

EUR public, 6

EUR private, 3

Other public, 5

Other private, 0 42

44 9

5

AUD

USD

EUR

Other

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. Contractual maturity date for hybrids and

callable subordinated instruments is the first scheduled conversion date or call date for the purposes of this disclosure. 2 Excludes securitisation.

FY12 1H13

0

2

4

6

Series 1

Series 2

Series 3

47

33

8

3 9

Senior unsecured Covered bonds RMBS & ABS

Hybrid Subordinated debt

55

21

14

6 4

44

34 11 4

1

6

AUD USD

EUR JPY

GBP Other

FY12 FY13 FY12

New term funding by type1 (%)

FY13

9

24

12

40

15

2 Years 3 Years 4 Years 5 Years >5 years

New term funding by original tenor1,2 (%)

11

10

1

59

19

New term funding by currency1 (%)

FY12 FY13


発行能力が高く、新しいタームファンディングに多様化をもたらす

15

AUD public, 32

AUD private, 10

USD public, 32

USD private, 11

EUR public, 6

EUR private, 3

Other public, 5

Other private, 0 42

44 9

5

AUD

USD

EUR

Other

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. Contractual maturity date for hybrids and

callable subordinated instruments is the first scheduled conversion date or call date for the purposes of this disclosure. 2 Excludes securitisation.

FY12 1H13

0

2

4

6

Series 1

Series 2

Series 3

47

33

8

3 9

無担保シニア債カバードボンド住宅ローン担保証券

ハイブリッド証券劣後債

55

21

14

6 4

44

34 11 4

1

6

AUD USD

EUR JPY

GBP Other

FY12 FY13 FY12

種類別タームデット新規発行1 (%)

FY13

9

24

12

40

15

2 Years 3 Years 4 Years 5 Years >5 years

年限別タームデット新規発行1,2 (%)

11

10

1

59

19

通貨別タームデット新規発行1 (%)

FY12 FY13


0.50 0.57 0.63 0.67 0.68 0.62 0.60 0.58 0.56 0.44

0.29 0.29

0.36 0.46 0.51

0.41 0.40 0.35 0.35 0.31

1.27

2.23 2.18

2.07 1.66

1.45 1.26

1.24 1.03

0.85

2.06

3.09 3.17 3.20

2.85

2.48

2.26 2.17

1.94

1.60

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

0.0

1.0

2.0

3.0

4.0

1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13

Impaired (lhs)

90+ days past due well secured (lhs)

Watchlist & substandard (lhs)

IAP (rhs)

Total Provisions (rhs)

CAP (inc. economic overlay) (rhs)

Significant improvement in asset quality

16

Stressed exposures as a % of TCE1 (%) and provisions ($m)

0

1

2

3

4

5

Pro

pe

rty &

b

usin

ess s

erv

ice

s

Reta

il le

nd

ing

Who

lesa

le &

R

eta

il T

rad

e

Ag

ricu

ltu

re, fo

restr

y &

fish

ing

Ma

nu

factu

rin

g

Se

rvic

es

Acco

mm

od

atio

n,

ca

fes &

re

sta

ura

nts

Con

str

uctio

n

Tra

nsp

ort

&

sto

rag

e

Fin

an

ce

&

insu

ran

ce

Utilit

ies

Min

ing

Oth

er

2H12 1H13 2H13

Stressed exposures by industry ($bn)


0.50 0.57 0.63 0.67 0.68 0.62 0.60 0.58 0.56 0.44

0.29 0.29

0.36 0.46 0.51

0.41 0.40 0.35 0.35 0.31

1.27

2.23 2.18

2.07 1.66

1.45 1.26

1.24 1.03

0.85

2.06

3.09 3.17 3.20

2.85

2.48

2.26 2.17

1.94

1.60

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

0.0

1.0

2.0

3.0

4.0

1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13

Impaired (lhs)

90+ days past due well secured (lhs)

Watchlist & substandard (lhs)

IAP (rhs)

Total Provisions (rhs)

CAP (inc. economic overlay) (rhs)

資産の質の大幅な改善

16

TCE1 (%)及び引当金(100万豪ドル)のストレス・エクスポージャー

0

1

2

3

4

5

Pro

pe

rty &

b

usin

ess s

erv

ice

s

Reta

il le

nd

ing

Who

lesa

le &

R

eta

il T

rad

e

Ag

ricu

ltu

re, fo

restr

y &

fish

ing

Ma

nu

factu

rin

g

Se

rvic

es

Acco

mm

od

atio

n,

ca

fes &

re

sta

ura

nts

Con

str

uctio

n

Tra

nsp

ort

&

sto

rag

e

Fin

an

ce

&

insu

ran

ce

Utilit

ies

Min

ing

Oth

er

2H12 1H13 2H13

産業別ストレス・エクスポージャー (10億豪ドル)


Maintaining mortgage portfolio quality

17

Westpac Australian housing

portfolio

2H12

Balance

1H13

Balance

2H13

Balance

2H13

Flow1

Total portfolio ($bn) 316.3 321.9 328.5 29.5

Owner-occupied (%) 48.2 48.1 47.9 48.4

Investment property loans (%) 41.5 42.2 43.1 47.8

Portfolio loan/line of credit (%) 10.3 9.7 9.0 3.8

Variable rate / Fixed rate (%) 87 / 13 85 / 15 81 / 19 71 / 29

Low Doc (%) 5.7 5.2 4.7 1.8

Proprietary channel (%) 58.4 58.2 58.0 57.0

First Home Buyer (%) 11.8 11.7 11.4 9.2

Mortgage insured (%) 25.8 24.4 23.3 16.8

2H12 1H13 2H13

Average LVR at origination (%) 69 69 69

Average dynamic2,3,4 LVR (%) 48 48 46

Average LVR of new loans5 (%) 69 70 72

Average loan size ($’000) 217 219 221

Customers ahead on repayments,

excl. offset accounts2,6 (%) 59 56 57

Properties in possession 289 248 353

Actual mortgage losses

(net of insurance)7 ($m) 43 52 43

Actual mortgage loss rate

annualised (bps) 3 3 3

0

10

20

30

40

50

60

70

0<=60 60<=70 70<=80 80<=90 90<=95 95+

FY13 drawdowns LVR at origination

Portfolio LVR at origination

Portfolio dynamic LVR 2,3,4

Australian housing portfolio (%)

1 Flow is all new mortgage originations total settled amount originated during the 6 month period ended 30 September 2013 and includes RAMS. 2 Excludes RAMS. 3 Dynamic LVR represents the loan-to-value ratio taking into account the current

outstanding loan balance, changes in security value and other loan adjustments.4 Property valuation source Australian Property Monitors. 5. Average LVR of new loans is based on rolling 12 month window for each year end period. 6 Customer loans

ahead on payments exclude equity/line of credit products as there are no scheduled payments. 7 Mortgage insurance claims 2H13 $14m (1H13 $10m, 2H12 $17m and 1H12 $13m).

-

1.0

2.0

3.0

4.0

Se

p-0

8

Ma

r-0

9

Se

p-0

9

Ma

r-1

0

Se

p-1

0

Ma

r-1

1

Se

p-1

1

Ma

r-1

2

Se

p-1

2

Ma

r-1

3

Se

p-1

3

90+ Past Due Total 90+ First Home Buyer

90+ Low Doc 90+ Investor

30+ Past Due Loss Rates

Australian mortgages delinquencies and loss rates (%)


住宅ローンポートフォリオの質を維持

17

ウエストパックの住宅ローンポートフォリオ（オーストラリア）

2H12

Balance

1H13

Balance

2H13

Balance

2H13

Flow1

ポートフォリオ全体 (10億豪ドル) 316.3 321.9 328.5 29.5

所有者居住用ローン (%) 48.2 48.1 47.9 48.4

投資用不動産向けローン (%) 41.5 42.2 43.1 47.8

ポートフォリオローン／クレジット・ライン (%)

10.3 9.7 9.0 3.8

変動金利/ 固定金利ローン (%) 87 / 13 85 / 15 81 / 19 71 / 29

Low Doc ローンの割合(%) 5.7 5.2 4.7 1.8

所有権取得目的 (%) 58.4 58.2 58.0 57.0

初回住宅購入者向けローン(%) 11.8 11.7 11.4 9.2

保証付き住宅ローン (%) 25.8 24.4 23.3 16.8

2H12 1H13 2H13

オリジネーション時平均LVR (%) 69 69 69

平均ダイナミック2,3,4 LVR (%) 48 48 46

新規ローンの平均LVR5 (%) 69 70 72

平均ローンサイズ (1,000豪ドル) 217 219 221

前払いの顧客(差引口座を除く)2,6

(%) 59 56 57

差し押さえ件数 289 248 353

住宅ローン実現損失（保険回収後）7 (100万豪ドル)

43 52 43

年率住宅ローン実現損失率 (bps) 3 3 3

0

10

20

30

40

50

60

70

0<=60 60<=70 70<=80 80<=90 90<=95 95+

FY13 drawdowns LVR at origination

Portfolio LVR at origination

Portfolio dynamic LVR 2,3,4

オーストラリア国内の住宅ローンポートフォリオ (%)

1 Flow is all new mortgage originations total settled amount originated during the 6 month period ended 30 September 2013 and includes RAMS. 2 Excludes RAMS. 3 Dynamic LVR represents the loan-to-value ratio taking into account the current

outstanding loan balance, changes in security value and other loan adjustments.4 Property valuation source Australian Property Monitors. 5. Average LVR of new loans is based on rolling 12 month window for each year end period. 6 Customer loans

ahead on payments exclude equity/line of credit products as there are no scheduled payments. 7 Mortgage insurance claims 2H13 $14m (1H13 $10m, 2H12 $17m and 1H12 $13m).

-

1.0

2.0

3.0

4.0

Se

p-0

8

Ma

r-0

9

Se

p-0

9

Ma

r-1

0

Se

p-1

0

Ma

r-1

1

Se

p-1

1

Ma

r-1

2

Se

p-1

2

Ma

r-1

3

Se

p-1

3

90+ Past Due Total 90+ First Home Buyer

90+ Low Doc 90+ Investor

30+ Past Due Loss Rates

オーストラリアにおける住宅ローンの延滞率及び損失率 (%)


• Australian mortgage customers continue to display a cautious

approach to debt levels, taking advantage of historically low mortgage

rates to pay down debt

– Including mortgage offset account balances, 71% of customers are

ahead of scheduled payments, with 22% of these being more than

2 years ahead

– Excluding mortgage offset account balances, 57% of Australian

mortgage customers are ahead of scheduled payments

– Prepayment levels impacted by increased flows into fixed rate

loans (where additional repayments are limited)

• Sound underwriting criteria underpin the Group’s very low level of

residential mortgage arrears and losses

• Credit policies are broadly aligned across brands and all credit

decisions are made by the Westpac Group, regardless of the

origination channel

• Loan serviceability assessments include an interest rate buffer,

adequate surplus test and discounts to certain forms of income

(e.g. dividends, bonus or rental income)

• Westpac has a minimum assessment rate, often referred to as a floor

rate, currently set at 6.80% p.a. across all brands

• In the current interest rate environment, the minimum assessment

rate is 181bps higher than the standard lending rate

Mortgage customer behaviour remains cautious

18

Australian home loan customers ahead on repayments1,2 (%)

1 Excludes RAMS. 2 Customer loans ahead on payments exclude equity loans/line of credit products as there is no scheduled principal payments. ‘Behind’ is more than 30 days past due. ‘On time’ includes up to

30 days past due.

0

10

20

30

40

50

Behind On Time < 1 Month < 1 Year < 2 Years > 2 Years

Sep-12

Mar-13

Sep-13

Sep-13 inc. mortgage offset accounts

301

52

31

312

(13) (31)

(22) (6)

FY

12

New

lendin

g

Redra

w/

Inte

rest/fe

es

Contr

act

re

paym

ents

Accele

rate

d

repaym

ents

Pro

pert

y sale

s &

oth

er

runoff

Exte

rnal

refinance

FY

13

Ahead on repayments

18.4

1H

09

2H

09

1H

10

1H

11

2H

11

1H

12

2H

12

1H

13

2H

13

Aust.mortgage1 offset

account balances ($bn) Australian mortgage1 balance growth ($bn)

exc. mortgage offset accounts


• オーストラリアの住宅ローン顧客は債務レベルに対し依然として慎重であり、かつてない住宅ローン利率の低さを利用して返済を続けている

– 住宅ローン差引口座の残高を含むと、顧客の71%が返済を繰り上げており、うち22%は2年以上前倒している

– 住宅ローン差引口座の残高を除くと、オーストラリアの住宅ローン顧客の57%が返済を繰り上げている

– 追加の返済に制限がある固定金利ローンの顧客が増え、繰上返済のレベルに影響した

• 引受基準は健全であり、グループの住宅ローンに延滞や損失が非常に少ないことを裏付けている

• クレジットポリシーはブランド全体を通して揃えられており、ローン組成チャネルにかかわらず信用に係る決定は全てウエストパックグループで行われる

• 融資可否を決める査定は金利バッファ、余剰金テスト、一定の形式の収益（配当、ボーナス、レンタル収益など）を含む

• ウエストパックの査定レートは、フロアレートと呼ばれる最低限のものであり、現在は全てのブランドで年率6.80%である

• 昨今の金利環境では、最小の査定レートは通常の融資レートの181bps上である

住宅ローンの顧客は依然として慎重

18

オーストラリアの住宅ローン顧客のうち前倒して返済している割合1,2 (%)

1 Excludes RAMS. 2 Customer loans ahead on payments exclude equity loans/line of credit products as there is no scheduled principal payments. ‘Behind’ is more than 30 days past due. ‘On time’ includes up to

30 days past due.

0

10

20

30

40

50

Behind On Time < 1 Month < 1 Year < 2 Years > 2 Years

Sep-12

Mar-13

Sep-13

Sep-13 inc. mortgage offset accounts

301

52

31

312

(13) (31)

(22) (6)

FY

12

New

lendin

g

Redra

w/

Inte

rest/fe

es

Contr

act

re

paym

ents

Accele

rate

d

repaym

ents

Pro

pert

y sale

s &

oth

er

runoff

Exte

rnal

refinance

FY

13

繰上返済

18.4

1H

09

2H

09

1H

10

1H

11

2H

11

1H

12

2H

12

1H

13

2H

13

豪州の住宅ローン差引口座の残高(10億豪ドル)

豪州の住宅ローンの1 貸付金残高の伸び (10億豪ドル)

exc. mortgage offset accounts

ECONOMICS


Key economic indicators1 (%) as at January 2014 Calendar year

2011 2012 2013f 2014f

World GDP 3.9 3.2 2.8 2.8

Australia GDP 2.4 3.6 2.4 2.6

Private consumption 3.1 2.5 1.8 2.8

Business investment2,3 17.0 16.3 -2.0 -2.0

Unemployment – end period 5.2 5.3 5.8 6.4

CPI headline – year end 3.0 2.2 2.3 2.5

Interest rates – cash rate 4.3 3.0 2.5 2.0

Credit growth, Total – year end 3.5 3.6 3.7 5.0

Credit growth, Housing – year end 5.4 4.5 5.0 5.8

Credit growth, Business – year end 1.3 2.9 2.0 4.0

New Zealand GDP 1.4 2.7 2.8 3.8

Unemployment – end period 6.3 6.8 6.0 5.1

Consumer prices 1.8 0.9 1.5 1.9

Interest rates – official cash rate 2.5 2.5 2.5 3.75

Credit growth – Total 0.9 3.6 4.7 5.0

Credit growth – Housing 1.2 3.7 5.9 5.2

Credit growth – Business 0.6 3.5 3.2 4.9

20

Australian and New Zealand economic forecasts

1. Source: Westpac Economics 2 GDP and component forecasts updated following the release of quarterly national accounts. 3 Business investment adjusted to exclude the effect of

private sector purchases of public assets.


Australia’s diverse and robust economy

8

9

12

3

8

10 13

11

3

6

12

6

Manufacturing Construction

Mining Rural

Utilities & transport Wholesale & retail

Property, business services Finance

Communications Household services

Education & health Government

Australia’s economy: diversified and flexible

1 Source: IMD World Competitiveness Yearbook. 2 German figure for 1990 is actually 1995 due to re-unification. 3 Excludes ownership of dwellings and taxes less subsidies.

21

Sources: ABS, Westpac Economics.

0

20

40

60

80

100

Australia UK Canada US Germany France

1990 2000 2010 2017(f)

2

Sources: Westpac Economics, IMF.

Net public debt levels as a % of GDP

• Diverse economy that goes well beyond mining - more than 80% of the economy is services based

• 22 years of uninterrupted economic growth (1991 – 2012)

– One of the few countries rated AAA/Aaa/AAA (S&P/Moody’s/Fitch)

• Only economy to consistently rank in the world’s top 5 most resilient economies since 20081

• Strong fiscal position with Federal Government net public debt levels very low at 11% of GDP

– While the Government is currently focused on fiscal consolidation there is scope for discretionary fiscal easing if needed

% GDP Sector contribution to GDP (%)3


Australia well-placed relative to developed economies

Sources: OECD, Westpac Economics.

-8

-6

-4

-2

0

2

4

6

Jun-97 Jun-01 Jun-05 Jun-09 Jun-13

Australia UK Canada

US Euro

Real GDP growth (%)

• Economy continues to perform well relative to other developed economies

• GDP is forecast to grow 2.4% in 2013 and 2.6% in 2014

– Growth expected to be below trend as the economy adjusts to lower levels of mining investment and non-mining investment remains sluggish

– Domestic growth is also expected to be constrained by continued weakness in the global economy

– Below trend for Australia but above recent and forecast growth rates for the world’s major advanced economies

• Unemployment rate remains low relative to other advanced economies, at 5.8% (at November 2013)

– Employment growth is expected to be modest over the next few quarters, consistent with below-trend economic growth

Sources: OECD, Westpac Economics.

2

4

6

8

10

12

14

Aug-97 Aug-01 Aug-05 Aug-09 Aug-13

Australia Canada

UK US

Euro

Unemployment rate (%)

% growth, year-ended %

22


Policy rate changes having desired effect

Sources: RBA, OECD, Westpac Economics.

0

1

2

3

4

5

6

7

8

Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13

Australia UK Canada

US Euro

Major countries’ policy rates (%)

• Cash rate has been cut by 225bps since 2011

− Currently 2.50% (February 2014)

− Low by historical standards but still leaves scope for additional easing if required

• Policy changes are having an effect, with the clearest evidence in housing markets where a moderate housing market recovery is underway

– Stimulus from lower interest rates to date more muted than previous easing cycles, although the full effects of the most recent rate cuts are still to be felt

• The AUD is expected to hold in the high 80¢ area in the short term, before moving towards 85¢ by the end of 2014

Sources: RBA, Westpac Economics.

0.80

0.90

1.00

1.10

1.20

0.80

0.90

1.00

1.10

1.20

Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14

USD USD

fair value band*

AUD/USD actual & forecast

* based on commodity prices, relative

interest rates and external debt.

f’casts

Australian dollar (AUD/USD)

%

23


Australia’s economic transition: from mining to non-mining

24

Sources: ABS, Westpac Economics. Sources: ABS, Westpac Economics.

0

2

4

6

8

10

12

14

16

0

2

4

6

8

10

12

14

16

Jun-89 Jun-93 Jun-97 Jun-01 Jun-05 Jun-09 Jun-13

% of GDP % of GDP

mining, CAPEX

housing investment

business investment (ex mining)

f/cs

end

2014

14.4%

11.2%

6.4%

4.7%

2.4%

6.2%

Investment: share of Australian economy (% of GDP)

-2

-1

0

1

2

3

4

-2

-1

0

1

2

3

4

consumer* mining investment

business investment

net exports GDP

ppts cont'

2012 2013f 2014f

ppts cont'

* includes housing

Australian growth mix: Contributions to GDP growth (%)

• Australia experiencing a rotation of economic growth from mining to non-mining activity

– Mining investment is entering a sustained decline, after several years of strong rises, that will see it swing from being a significant growth driver to a drag over

2013-15

– The mining drag will be partially offset by an improved net export contribution as resource projects become productive and capital imports decline

• A pick-up in non-mining sectors, interest rate sensitive sectors such as housing in particular, will be critical to maintaining growth

– Complicating this transition is a soft global economy, consumer caution, a persistently high $A, and patchy business conditions

– However, on the positive side, non-mining activity has been ‘dormant’ for several years, restrained by high interest rates and a high $A while the mining boom

dominated. Investment in these sectors is near historical lows, providing scope for a pick-up and little risk of further declines.


Commodity cycle evolves

25

Sources: BREE, ABS, Westpac Economics.

0

20

40

60

80

100

120

0

50

100

150

200

250

300

2002/03 2006/07 2010/11 2014/15 2018/19

$bn $bn

committed investment (lhs)

BREE* most likely projection

mining capital expenditure (rhs)

updated: May ’13

*Bureau of Resources

and Energy

Economics

100

150

200

250

300

350

80

180

280

380

480

580

680

Oct-02 Oct-04 Oct-06 Oct-08 Oct-10 Oct-12 Oct-14

index index

bulks* (lhs)

exchange traded* (rhs)

*bulks includes iron ore and coal.

exchange traded includes rural, crude oil, base

metals & gold.

Westpac

forecasts

Sources: Westpac Economics, Bloomberg, ABS.

Committed projects and mining investment ($bn) Commodity prices (index)

• Australia’s mining boom is entering a new phase in which investment winds back from recent extreme highs but production and exports surge strongly as new

projects become productive

• With commodity price declines acting as a drag on incomes near term, the mix will see mining activity as a whole detract from, rather than add to, growth

nationally. The low labour requirement of the production stage compared to the investment stage also points to a significant drag on labour market conditions

• On the positive side, Chinese demand is continuing to grow, albeit more slowly, most commodity prices remain comfortably above both ‘pre-boom’ levels and

2008-09 lows and Australian producers also retain significant cost advantages in some areas, iron ore in particular

• On the downside, prices overall are expected to continue softening and there are unlikely to be any major new gas or coal investments in coming years


Credit growth expected to remain relatively subdued

Sources: Westpac MI, NAB, Westpac Economics.

-40

-30

-20

-10

0

10

20

30

60

70

80

90

100

110

120

130

Sep-01 Sep-05 Sep-09 Sep-13

net bal. net bal.

Consumer (lhs) Business * (rhs) monthly

* Rebased to avg 0

Business confidence and consumer confidence (net balance)

• Domestic business and household balance sheets remain in good shape

– For businesses, pressure on incomes has been mitigated by low gearing levels

– For households, efforts to increase savings and repayment buffers have bolstered balance sheets in recent years while interest rate reductions have seen

arrears ease toward historical lows despite continued relatively high levels of gearing

• Ongoing business and consumer deleveraging has seen modest system credit growth over 2013, at around 3.8%yr, although more recently housing credit growth

has edged up to 5.1%yr in response to lower interest rates, while business credit growth is around 1.9%yr.

• Until recently Australian business and consumer confidence has been subdued. Despite a recent election-related improvement in confidence, weak demand and

spare capacity across businesses, and elevated job loss concerns amongst consumers will restrain the upturn in borrowing

Sources: RBA, Westpac Economics

-10

-5

0

5

10

15

20

25

30

35

-10

-5

0

5

10

15

20

25

30

35

Aug-81 Aug-86 Aug-91 Aug-96 Aug-01 Aug-06 Aug-11

total housing business % ann % ann

3 year period

f/c

Australian private sector credit growth (% ann)


Chinese growth remains a positive for Australia

• As a $US7 trillion economy, China grew at 10%. As a $US10 trillion economy, we expect it to grow at 7%

• Represents an equivalent incremental contribution to global absorptive capacity, at higher levels of energy, protein, metal and consumer goods demand per head

• Were China to slow immediately to a 5% pace (a big downside shock that we do not envisage), it would still double its 2012 size by 2025

• Chinese authorities have shown a clear commitment to maintaining growth above 7% but will be less tolerant of strong credit driven expansions – the double digit

growth rates that have featured regularly over the past 20 years are now unlikely to occur

• Australia’s economic linkages with China continue to grow, led by trade

– China now accounts for over 25% of Australia’s exports

– Investment, tourism and migration flows also significant (tourism arrivals from China are now 11% of all arrivals, up over 18% on a year ago)

0

5

10

15

20

25

30

Household

consum

ptio

n

Gro

ss fix

ed c

apital

form

atio

n

Export

s*

Import

s*

Manufa

ctu

rin

g v

alu

e

added

Constr

uctio

n v

alu

e

added

Serv

ices v

alu

e a

dded

PP

P G

DP

Austr

alia

n e

xport

s*#

CO

2 e

mis

sio

ns``

Energ

y u

se^

%

1980 2000 2010

* Goods & services. ^ Total primary energy

supply

`` From fossil fuel combustion. # 1980 figure is a

Westpac estimate. All national accounts related

China’s share: world activity & Australian exports (%)

Source: Westpac Economics. Sources: UN, IMF, IEA, Westpac Economics.

0

5

10

15

20

25

30

35

0

5

10

15

20

25

30

35

1993 1998 2003 2008 2013 2018 2023 2028

% of 2012 GDP % of 2012 GDP

8% CAGR

History & 7% CAGR

6% CAGR

5% CAGR

Chinese real GDP increments: 4 scenarios (% of 2012 GDP)


New Zealand – the economic cycle

• The New Zealand economy is experiencing a strong upturn in domestic demand, driven by earthquake-related construction activity and rising house prices

• Economic growth for the year to Sept 2013 was 2.6%. GDP growth rebounded strongly in the September quarter as the agricultural sector recovered from

drought. Economic growth is expected to rise to 3.9% in 2014

• The Canterbury region was struck by a series of damaging earthquakes in 2010 and 2011. Repair work has accelerated rapidly and is expected to double again

by 2016. A slowdown in quake-related construction work in the second half of the decade is expected to slow economic growth

• New Zealand’s terms of trade are at very high levels due to strong commodity export prices. Global milk prices in particular are currently extremely high.

• However, ongoing Government austerity is a drag on growth

-3

-2

-1

0

1

2

3

4

5

6

7

-3

-2

-1

0

1

2

3

4

5

6

7

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

% %

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

$bn $bn

Residential

Commercial

Infrastructure

Estimate Forecast

Source: Statistics NZ, Westpac Economics

New Zealand GDP growth and forecast (%) Earthquake-related construction activity in Christchurch ($bn)

Source: Westpac Economics

Westpac

forecast


New Zealand – the housing market

• House price inflation has accelerated to almost 10% on a nationwide basis, but there are wide regional differences – 17.9% in Auckland, low single digits in many

other parts of New Zealand

• The main driver has been low interest rates – the Reserve Bank of New Zealand (RBNZ) has been required to keep the OCR low due to low inflation, itself a

product of the high exchange rate. A shortage of housing stock is also playing a role.

• House price growth is forecast to be 6.5% in 2014. The Reserve Bank has recently required banks to limit high-LVR lending to just 10% of total new mortgage

lending. Combined with a recent sharp increase in fixed mortgage rates, this is expected to cause the rate of house price inflation to slow in 2014. However, very

strong net immigration will limit the fallout.

-30

-20

-10

0

10

20

30

40

-6

-4

-2

0

2

4

6

8

10

12

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

ann % ann %

0

1

2

3

4

5

6

7

8

9

1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

%

Source: QV, Statistics NZ, Westpac Economics

New Zealand house price inflation (annual %)

Source: RBNZ, Westpac Economics

New Zealand Official Cash Rate (%)

Westpac

forecast

Westpac

forecast

AUSTRALIAN HOME LENDING


Housing activity responding to monetary policy

Sources: RP Data-Rismark, Westpac Economics.

• Australia’s housing sector is showing clear signs of a pick-up although the response to lower interest rates has been slower and more muted than in previous easing

cycles and conditions remain uneven across segments and states

• The value of loan approvals is up 17%yr, led by strengthening investor and ‘upgrader’ demand but with weak first home buyer activity

– Dwelling approvals showing similar gains

• Total number of approvals is still well below previous peaks

– Total value of finance approvals is near its 2007 and 2009 peaks, although both prices and incomes have increased significant ly since then

• By state, activity has been considerably stronger in NSW and WA, with conditions more mixed in Victoria, Queensland and SA

0

2

4

6

8

10

12

0

2

4

6

8

10

12

Aug-91 Aug-96 Aug-01 Aug-06 Aug-11

AUDbn/mth AUDbn/mth

'upgraders', ex-refinancing

investor finance

first home buyers

Housing finance approvals: value of housing finance ($bn/mth)

Sources: ABS, Westpac Economics.

90

100

110

120

130

140

150

90

100

110

120

130

140

150

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Index* Index* current 2008-09

2001-02 1996-97

1990-93 1987-88

1983-84

*index based to 100 in month

prior to first rate cut

months

Housing credit: rate cut cycles compared (index)


Australian house prices recovering

• House prices are firming again, up 7.4% in the year to September nationally,

after a moving through a mild correction in 2011-12

– Conditions vary with gains ranging from around 8% in Sydney and Perth,

to 5.5% in Melbourne and 1% in Brisbane and Adelaide

– These gains have only just seen the level of prices nationally return to its

2010 peak, while average income has risen 10% since then

– Recent strength in Sydney follows a significant underperformance over

the last 10 years

• We expect housing recovery to continue to be a ‘stop-start’ and uneven one

– Headwinds that are yet to fully impact with some markets facing

increases in new dwelling supply (Vic, WA) and the mining downturn to

play through fully to housing (WA, Qld)

– Expect Australian households to continue to exercise balance sheet

restraint, showing a reluctance to increase debt therefore limiting price

growth

90

95

100

105

110

115

120

125

130

135

140

90

95

100

105

110

115

120

125

130

135

140

Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12

index index

Sydney

Perth

Melbourne

Brisbane

last 5yrs

Dwelling prices: Australia capital cities (index)

Sources: RP Data-Rismark, Westpac Economics.


Housing market fundamentals sound

Sources: REIA, Westpac Economics.

0

1

2

3

4

5

6

0

1

2

3

4

5

6

Jun-83 Jun-88 Jun-93 Jun-98 Jun-03 Jun-08 Jun-13

Australia Sydney Melbourne

investor

housing

boom

... near historic

lows since

2007

Rental vacancy rates (%)

Sources: RP Data-Rismark, Residex, Westpac Economics.

0

50

100

150

200

250

300

350

400

1950s 1960s 1970s 1980s 1990s 2000s last 3 years

population dwelling stock*

* net of demolitions – implied by Census data to 2006; Westpac

estimates thereafter

Population versus dwelling stock (annual average change ‘000)

• Significant tightening in the supply-demand balance for housing over the last decade from a combination of strong migration-driven population growth and subdued

new dwelling construction. Pressure is evident in

– Rental markets where vacancy rates have been near historical lows over the last 5 years

– Younger Australians delaying forming a new household, opting instead to stay longer in the family home

• Population has been rising at 300,000 a year over the last decade, compared to 200,000 a year in the 1990s, and migration inflows are expected to remain

relatively strong

• New completions have been adding to the stock of dwellings at a slightly slower pace and despite recent gains and strong construction activity in specific markets,

dwelling approvals nationally still point to completions tracking a similar rate to that averaged in the 1990s

%

’000


Housing affordability much improved

• Despite recent gains in house prices, affordability remains relatively good by historical standards

– Measures based on the proportion of income required to service a mortgage on a median priced dwelling show, nationally, the best mix of prices, interest rates

and incomes since 2009, and prior to that since 2003

• Improvements in affordability over the last 5 years assisted by

– Historically low level of mortgage rates

– Average household incomes rising faster than prices. Indeed, house prices nationally have tended to track average household income fairly closely over the

last decade, the implication being that price to income ratios (an alternative metric of affordability) have been stable

10

15

20

25

30

35

40

10

15

20

25

30

35

40

Mar-79 Mar-84 Mar-89 Mar-94 Mar-99 Mar-04 Mar-09 Mar-14

% %

estimates based on

capital cities prior to

1993

%income required to service

mortgage of 75% median dwelling,

all regions

long run avg

deteriorate

improve

10yr avg

House affordability: all dwellings (%)

Sources: RP Data-Rismark, Residex, Westpac. Sources: RP Data-Rismark, ABS, Westpac Economics.

90

110

130

150

170

190

90

110

130

150

170

190

Dec-02 Dec-05 Dec-08 Dec-11

index index

dwelling prices

income per household

income per capita

Australia: dwelling prices versus incomes (index)


Household leverage: a more cautious approach

• The last five years have seen a significant shift in the behaviour of Australian households, resulting in a major shift in household leverage

• A more cautious attitude towards finances has seen a sharp and sustained rise in household savings rates, slower credit growth and faster prepayment rates on

mortgages

• After a strong run-up over the previous 20 years, the aggregate household debt to income ratio has tracked broadly sideways since 2007 with minor fluctuations

around the 150% level

• This understates the shift towards deleveraging. Mortgage prepayments are often made via the accumulation of funds in mortgage offset accounts, which are

technically classified as deposits rather than a reduction in loan principal. Leverage ratios including households’ direct holdings of cash and deposits show a more

pronounced decline of 21points since 2007

• Households continue to perform well in servicing their debts with mortgage arrears at a 5 year low and very low by international standards

Sources: ABS, RBA, Westpac.

-20

0

20

40

60

80

100

120

140

160

180

Mar-77 Mar-87 Mar-97 Mar-07

-20

0

20

40

60

80

100

120

140

160

180

% %

accumulated savings since Jun-07

total (gross) debt

housing debt

total debt net of cash & deps*

trend since Jun-07

*direct holdings only –22pts since

peak

= 42.8%

~20pts

elsewhere?

Australian households: debt to income ratio (%)

Sources: ABS, RBA, Standard & Poor's, Westpac Economics.

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

Jan-96 Jan-99 Jan-02 Jan-05 Jan-08 Jan-11 Jan-14

10

12

14

16

18

20

22

24

% %

debt serv ratio (mortgagors, lagged 6mths, rhs)

arrears rate (lhs)*

*% of securitised loans in arrears, by

value, including self-securitised loans

WBC

forecasts

Pressure easing on existing borrowers (%)


Australian mortgage market features underpin asset quality

36

Australian mortgage market

90+ day prime arrears by country2 (%)

Market share • 4 major banks dominate - 83% share held

• Major banks have a lower share of low doc market, with

low flow in this segment over recent years

Lenders

recourse

• Banks in Australia have full recourse to the borrower’s

mortgaged property and other assets and future earnings

• Banks can and do pursue defaulting borrowers for losses

• Reduces speculative buying behaviour

Products • Majority of housing loans are variable rate (>85%)

• Fixed rate loans for short periods of time (max. 12 years)

– in most cases customer opt for 3 to 5 years

• Fixed rate borrowers generally incur a break fee if they

choose to refinance within the fixed period

• Interest rate buffers built into loan serviceability tests at

application; Interest only loans assessed on a full P&I

basis

• Interest payments on primary residence are not tax

deductible, provides incentive to pay off mortgage

Regulation • For mortgage insured loans, mortgage insurance covers

the entire loan

• Strict prudential supervision provided by one national

regulator, APRA

Performance • Australian 90+ day prime arrears at low levels -

absolutely and relative to other major economies

25%

27% 17%

15%

16% Westpac (incl. St.George)

CBA (incl. BWA)

NAB

ANZ

Other banks

0.0

1.0

2.0

3.0

4.0

Jun-0

3

Dec-0

3

Jun-0

4

Dec-0

4

Jun-0

5

Dec-0

5

Jun-0

6

Dec-0

6

Jun-0

7

Dec-0

7

Jun-0

8

Dec-0

8

Jun-0

9

Dec-0

9

Jun-1

0

Dec-1

0

Jun-1

1

Dec-1

1

Jun-1

2

Dec-1

2

Jun-1

3

Australia UK US Netherlands

1 Source: APRA Banking Statistics August 2013 2 Source: S&P and Bloomberg.

Australian bank mortgage market share1 (%)


Delinquencies

• Lower interest rates and a continued conservative approach to debt

by borrowers have supported very strong credit quality

• 90+ days delinquencies remain low at 53bps, down 5bps (up 1bp

FY12/FY13) with the impact of seasonal trends retracing in 2H13

• 30+ days delinquencies 119bps, down 22bps (unchanged

FY12/FY13)

Properties in possession

• A more active approach to assisting customers in late cycle arrears

has seen an increase in properties in possession to 353 at September

2013, up from 248 at March 2013 (289 at Sep 2012)

Loss rates

• Portfolio losses of $95m represent a loss rate of 3bps annualised (net

of insurance claims1); loss rate unchanged from 1H13 (unchanged

FY12/FY13)

• Loss rates remain very low by international standards – due to sound

underwriting standards, high levels of borrower equity, mortgage

insurance and active collections strategies

Australian housing portfolio delinquencies at low levels

37

1 Mortgage insurance claims 2H13 $14m (1H13 $10m, 2H12 $17m and 1H12 $13m). 2. ABA Cannex July 2013

0.0

0.5

1.0

1.5

Mar-

09

Jun-0

9

Sep

-09

Dec-0

9

Mar-

10

Jun-1

0

Sep

-10

Dec-1

0

Mar-

11

Jun-1

1

Sep

-11

Dec-1

1

Mar-

12

Jun-1

2

Sep

-12

Dec-1

2

Mar-

13

Jun-1

3

Sep

-13

ALL NSW/ACT VIC/TAS

QLD WA SA/NT

Australian mortgage 90+ days delinquencies (%)

-

10

20

30

40

50

NSW & ACT VIC & TAS QLD WA SA & NT

All banks

Westpac portfolio (all brands)

Westpac FY13 drawdowns (all brands)

2

Australian housing portfolio by State (%)


• Investment property loans (IPLs) make up

43.1% of Westpac’s Australian mortgage

portfolio

• 44% of IPL loans are originated at 75-80% LVR,

to maximise tax benefits and avoid mortgage

insurance costs

• While the majority of IPLs are interest-only, the

realised amortisation profile closely tracks the

principal and interest portfolio, with 41% of

interest-only IPL customers ahead on

repayments at FY13

• Compared to owner-occupied applicants, IPL

applicants on average are older, have higher

incomes and higher credit scores

• Specific credit policies apply to IPLs to assist

risk mitigation, for example

– Holiday apartments subject to tighter

acceptance requirements

– Additional LVR restrictions apply to single

industry towns

• IPL delinquency performance has historically

been better than the portfolio average

– At FY13, IPL 90+ days delinquencies were

42bps compared to 53bps for the total

portfolio

• IPL losses $44m1 in FY13, representing 3.4bps

of the total portfolio

• Self-managed Super Fund balances, mainly

IPLs, a very small part of the portfolio, at <1% of

Australian mortgage balances

Australian investment property portfolio performing well

38

1 Excludes RAMS.

0

10

20

30

40

50

0-6

0

60-7

0

70-7

5

75-8

0

80-8

5

85-9

0

90-9

5

95-9

7

97+

Owner Occupied IPL

0.0

0.5

1.0

Mar-

10

Sep

-10

Mar-

11

Sep

-11

Mar-

12

Sep

-12

Mar-

13

Sep

-13

All

Non-IPL

Mix (IPL & Owner Occ.)

Multi (More than 1 IPL)

Single IPL

Australian mortgage1 loan-to-value ratio

at origination (%)

Australian mortgage1 90+ days

delinquency by customer type (%)

2.8 3.4 2.2

11.0

FY

13 tota

l port

folio

FY

13 IP

L p

ort

folio

FY

13 O

wner

Occ.

port

folio

1992 tota

l port

folio

(la

st re

cessio

n)

Australian mortgage1

loss rates (bps)

28

25

47

Single IPL

Mix (IPL & Owner Occ.)

Multi (>1 IPL)

Australian IPL1

portfolio (%)

By customer type

0

5

10

15

20

25

0<

=50

50<

=75

75<

=100

100<

=125

125<

=150

150<

=200

200<

=500

500<

=1m

1m

+

Owner Occupied IPL

Australian mortgage1 applicants by gross

income band (%)


Lenders mortgage insurance managing risk transfer

39

1 Waivers of the LMI requirement are provided to certain approved borrowers. Waivers are not provided to Low Doc borrowers. 2. Prudential Capital Requirement (PCR) determined by APRA. 3 2013 industry

data not available at 4 November 2013. 4 Source: Westpac. 5 Loss ratio is claims over the total of earned premium plus reinsurance rebate plus exchange commission. 6 Insured coverage is net of quota share.

76.8

10.2 13.1

External mortgage insurance

Westpac channel through QBE LMI

St.George and RAMS through

Genworth

LVR >80% to ≤ 90% and

Low Doc LVR >60% to ≤ 80%

insured through captive LMI

LVR >90%

insured externally

In-house mortgage

insurance

WLMI

40% risk retained by WLMI

6

Lenders mortgage insurance (LMI) structure at 30 September 2013

LVR ≤80% and Low Doc

LVR ≤60% not insured

1H12 2H12 1H13 2H13

Insurance claims ($m) 13 17 10 14

WLMI loss ratio5 (%) 30 35 30 38

Gross written premiums ($m) 32 23 25 25

• Lenders mortgage insurance provides the following benefits to the Westpac

Group

– Risk transfer / loss mitigation

– Improvement in the quality of risk acceptance via the additional layer of

independent review provided by the mortgage insurer

• New mortgages with origination LVR between 80-90% (or 60-80% for Low

Doc)1 are generally covered by Westpac Lenders Mortgage Insurance

(WLMI), Westpac Group’s captive lenders mortgage insurer, and are

subsequently reinsured

• Reinsurance arrangements through four providers further reduces risk by not

relying on a single supplier

• Mortgages with origination LVR >90% are insured with third parties (prior to

2009 insured through WLMI)

• WLMI provides the Westpac Group with an increased return on the

mortgages it insures through the capture of underwriting profit

• WLMI is strongly capitalised (separate from bank capital) and subject to

APRA regulation. Capitalised at 1.25x PCR2

• Scenarios confirm sufficient capital to fund claims arising from events of

severe stress – estimated losses for WLMI from a 1 in 200 year event are

$267m (net of re-insurance recoveries)

0

20

40

60

2004 2005 2006 2007 2008 2009 2010 2011 2012

LMI Industry Loss Ratio (%) WLMI Loss Ratio (%)

WLMI underwriting performance has consistently outperformed industry3

5 4

Quota share reinsurance

60% risk transferred through quota share

with Genworth Australia, QBE LMI,

Arch Re and Tokio Millennium


• Westpac regularly conducts a range of portfolio stress tests as part of

its regulatory and risk management activities

• The Australian mortgage portfolio stress testing scenario presented

represents a severe recession – significant reductions in consumer

spending and business investment lead to six consecutive quarters of

negative GDP growth, resulting in a material increase in

unemployment and nationwide falls in property and other asset prices

• Estimated Australian housing portfolio losses under stress conditions

are manageable within the Group’s risk appetite and capital base

– Yearly average losses over the stressed scenario $761m,

representing 23bps of the portfolio

– Cumulative net loss modelled over the three years is $2.3bn

– WLMI and external LMI insurance claims would also be higher –

an estimated additional $386m in total over the three years1

• Westpac’s captive mortgage insurer, Westpac Lenders Mortgage

Insurance (WLMI), separately conducts stress testing to ensure it is

sufficiently capitalised to cover mortgage claims arising from a

stressed mortgage environment

• Target capital ratios at the Westpac Group level also consider the

combined impact on the mortgage portfolio and WLMI of severe

stress scenarios to provide appropriate capital buffers

Mortgage portfolio stress testing outcomes

40

1 Australian mortgage stress testing model recalibrated in 2H13 to reflect a more severe loss experience in Years 1 and 2 and more conservative estimates of LMI losses over the 3 year period.

Australian mortgage portfolio stress testing as at 30 September 2013

Key assumptions Stressed scenario

Current Year 1 Year 2 Year 3

Portfolio size ($bn) 335 323 318 319

Unemployment rate (%) 5.8 11.2 10.2 8.9

Interest rates (cash rate, %) 2.5 1.0 1.0 1.0

House prices

(% change cumulative) 0.0 -13.0 -21.2 -23.4

Annual GDP growth (%) 2.3 -3.9 -0.2 1.7

Key outcomes1

Stressed losses

(net of LMI recoveries) 3bps 34bps 31bps 6bps


Home loan evaluation process - originations

• Regardless of origination source, all

loans are subject to Westpac’s

standard underwriting criteria

• Credit decision and verification

functions are retained by Westpac

Exception

Request

Application

Referral

Credit

Conditional

Approval

Origination

• Westpac

• Approved third party

Application

information verified

Mortgage Insurance

decision

(if required)

Valuation Savings evidence

(if required)

Operations

Documentation Pack

• Terms & Conditions Letter

• Mortgage etc

Settlement/Drawdown

Automated Credit Decision

• Scorecard

• Underwriting standards

• Credit bureau

Manual Credit Decision

Credit Manager

Conditional

Approval

Exception

Request


Arrears management and collections

• Customer delinquency management is segmented by risk:

– Risk is assessed based on historical loan and customer attributes

– Higher risk customers are contacted earlier and more assertively,

leaving lower risk customers to self-cure or be contacted later by

collections

• Customers are contacted by SMS, letter and phone

• External property managers are used for the repossession and

realisation process

• Properties are repossessed and then sold by the most expedient

method

• Shortfall claims are submitted to insurer within 28 days from date of

settlement

• Customers experiencing hardship are assessed and managed by

Assist, a dedicated hardship team that is part of collections

Typical collections process (medium risk customer) Days

SMS 3

Phone call 10

1st reminder letter + phone call 18

2nd reminder letter + phone call 22

Final letter + phone call 45

Default notice issued 65+

Letter of demand sent 95+

Legal judgement sought and notice to vacate issued 120+

Valuation conducted by a panel valuer and appraisal

obtained 134+

Agent appointed and marketing campaign initiated 140+

Security sold and settlement effected, proceeds applied

to debt and shortfall (if any) realised (or LMI claim made

if insured)

240+

SECURITISATION


Securitisation an important part of the Group’s funding

44

• Securitisation is an important part of the Group’s funding

– A$10bn in outstanding issuance, represents 2% of the Group’s total

funding at 30 September 2013, mostly RMBS issuance

– Provides additional diversity to funding and investor base

• 3 transactions in FY13 in response to strong investor demand

– $4.35bn across 2 RMBS transactions and $1.2bn through one Auto ABS

transaction

– Auto ABS, issued in Dec 2012, was a first for a major Australian bank.

Previous Auto ABS issued in 2008 sponsored by St.George prior to the

merger with Westpac

– Transactions have been well supported by Australian domestic market, as

well as offshore investors

• Westpac has outstanding securitisation transactions under both the WST and

Crusade programmes

– Westpac Securitisation Trust (WST) Programme is Westpac’s programme

for securitising Westpac-originated residential mortgages

– Crusade Programme is Westpac’s vehicle for securitising St.George

originated residential mortgages and auto loans

• Following the merger with St.George

– Securitisation management and execution integrated into one team

– Crusade RMBS Programme is in run off

– Crusade ABS platforms and infrastructure utilised for Auto ABS

– New securitisation RMBS pools sourced solely from Westpac originated

mortgage pools until the origination and servicing platforms are fully

integrated

-

2

4

6

8

10

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

WST Crusade

Westpac re-opens domestic RMBS market with first major bank deal since 2009

A$1.2bn Auto ABS in Dec 2012 - first for a major Australian bank

WST Trust Series 2013-1, A$2.1bn in Feb 2013, and WST Trust 2013-2 in Oct 2013 $A2.25

Minimal changes to Lloyd’s Bella securitisations

Following the completion of the acquisition of Capital Finance Australia

Limited ("CFAL") and the Bella securitisations on 31 December 2013 as part

of acquisition of Lloyds Banking Group’s Australian business, it is intended

that the only changes to the existing Bella securitisations will be:

• The interest rate swaps which have been novated to Westpac Banking

Corporation

• The existing Trust Manager which have been replaced with Westpac

Securitisation Management Limited ("WSM"). WSM is also the appointed

Trust Manager for Westpac's WST RMBS programme, the Crusade ABS

(auto) programme and Westpac's covered bond programme

Original RMBS and ABS issuance by calendar year (A$bn)


• All WST transactions backed by prime

residential mortgages

• Consistent pool parameters and transaction

structures

• Low LVRs

• Long seasoning

• Consistently outperforms SPIN and major

bank SPIN

WST RMBS performance

45

Key pool comparison statistics (issuance)

Source: Presales, Bloomberg, Westpac ABS Strategy

WST

2013-2

WST

2013-1

WST

2012 - 1

WST

2011-3

WST

2011-2

WST

2011-1

WST

2009-1

Pricing Date Sep-13 Feb-13 May-12 Oct-11 Jun-11 Feb-11 Dec-09

Tranche A A A A A A A

WAL (yrs) 3.0 3.0 3.0 3.0 2.9 2.9 2.6

Price (bps) 85 85 140 125 100 100 130

Notes Issued A$m 2,070 1,932 1,058 1,472 2,024 920 1,840

Average Loan Size A$'000 256 245 211 251 243 270 198

Wtd Avg LVR 62% 61% 63% 63% 63% 64% 58%

LVR > 80% 10.8% 6.4% 3.1% 1.9% 2.3% 1.4% 0.5%

Max LVR 95% 94.6% 94.4% 95% 95% 95% 93%

Wtd Avg Seasoning mths 37.1 45.4 42.0 37.0 35.8 30.2 39.7

Low Doc Loans 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Interest Only Loans 24.3% 9.6% 5.1% 6% 5% 4% 25%

NSW & ACT 35.2% 36.2% 37.6% 40% 39% 43% 41%

VIC 26.6% 25.0% 25.5% 25% 25% 28% 24%

Metro / Non-metro 78%/22% 76%/24% 76% / 24% 76% / 24% 77% / 23% 86% / 14% 78% / 22%

LMI Coverage 13% 16% 19% 15% 16% 5% 6%

S&P Credit Support Pre-LMI (Old Criteria) - - - 3.7% 3.7% 3.2%

S&P Credit Support Pre-LMI (New Criteria

/ RFC) 5.0% 4.3% 4.3% 4.4% 6.2% - -

Credit Support Provided 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%

0

1

2

3

4

Jun-0

6

Dec-0

6

Jun-0

7

Dec-0

7

Jun-0

8

Dec-0

8

Jun-0

9

Dec-0

9

Jun-1

0

Dec-1

0

Jun-1

1

Dec-1

1

Jun-1

2

Dec-1

2

Jun-1

3

WST Arrears SPIN

Major Bank SPIN

Source: Standard and Poor’s RMBS Performance Watch

High quality product

Performance of Avg WST vs the Major Bank Prime SPIN


Crusade ABS transaction comparison

46

Deal Crusade ABS 2012-1 SMART 2012-4 SMART 2012-2 REDS EHP Bella 2012-1 SMART 2012-1

(Issue Date) (Dec 12) (Oct 12) (Jun 12) (May 2012) (May 2012) (Feb 2012)

Size $1.2bn $655m $566m $700m $453m $525m

‘AAA’ Credit Enhancement 15% 12% 12% 16% 23% 12%

Collateral Auto: 100% Auto: 100% Cars: 79% Trucks: 19% Other: 2%

Cars: 62% Trucks/Bus: 38%

Cars: 56% Trucks: 7% Other: 37%

Cars 79% Trucks 19% Other 2%

Number of Contracts 59,609 39,840 16,518 13,904 13,048 24,897

W.A. Yield 11% 8% 9% 8% 9% 9%

W.A. Seasoning (mth) 19 8 6 24 15 5

W.A. Remaining term (mth) 41 42 43 29 37 43

W.A. Balloon 8% 32% 30% 18% 15% 30%

% of Pool with Balloon 32% 82% 37% 52% 83%

New vs. Used New: 69% New: 63% New: 63% New: 72% New: 83% New: 64%

Used: 31% Used: 37% Used: 37% Used: 28% Used: 17% Used: 36%

Average Loan Size A$ 20,131 32,284 34,285 35,961 35,756 34,844

Max Loan Size A$ 262,970 478,413 331,345 896,334 780,586 336,011

Receivable Contracts Finance Lease 12% Finance Lease 35% Financial Lease 36% Finance Lease 5% Finance Lease 11% Financial Lease 37%

Goods Loan 14% Goods Loan 23% Goods Loan 18% Goods Loan 52% Goods Loan 43% Goods Loan 18%

Hire Purchase 8% Hire Purchase 14% Hire Purchase 17% Hire Purchase 31% Hire Purchase 35% Hire Purchase 17%

Consumer Finance 66% Lease Gov Status 28% Lease (Gov't) 29% Bill of Sale 11% Novated Lease 12% Lease (Gov't) 28%

Adverse Credit History 0% 0% 0% 0% 0% 0%

Novated receivables 12% 62% 64% 0% 12% 64%

• Credit enhancement in excess of minimum required by agencies

• 12 month revolving period

• Crusade ABS – 100% auto receivables

• Long seasoning

ADDITIONAL INFORMATION


Westpac Retail & Business banking

34%

St.George Banking Group 19%

BT Financial Group 11%

Westpac Institutional

Bank 24%

Westpac New Zealand

9%

Westpac Pacific 2%


1%

Westpac Banking Corporation Overview as at 30 September 2013

48

1 APRA Banking Statistics September 2013 2 RBA September 2013. 3 RBNZ March 2013 4. Plan for Life June 2013 All Master Funds Admin.

Westpac: Contribution to FY13 NPAT by division (%)

Westpac Retail &

Business Banking

St.George

Banking

Group

BT

Financial

Group

Westpac

Institutional

Bank

Westpac

New

Zealand

Westpac

Pacific and

Group

Australian Financial Services

Australian Financial

Services (64%)

Balance sheet

Total assets $696.6bn

Total loans $536.2bn

Customer deposits $382.6bn

Equity $47.5bn

Market Share

Australian household deposit market share1 23%

Australian housing market share2 23%

Australian business market share2 18%

New Zealand household deposit market share3 21%

New Zealand consumer lending market share3 20%

Australian wealth platforms market share4 20%


Tier 2 Capital comparison

49

Characteristic Basel III compliant Tier 2 Old-style Tier 2 (specifically Lower Tier 2)

Absorb losses on a "gone

concern" basis Gone concern capital Gone concern capital

Non-discretionary,

cumulative payments

Must pay securities subject to solvency tests; deferred

payments accumulate with compounding

Must pay securities subject to solvency tests; deferred

payments accumulate with compounding

Minimum Term Minimum term of at least 5 years; straight line amortisation

over final four years

Minimum term of at least 5 years; straight line amortisation

over final four years

Call Right Can call after a minimum of five years with APRA's approval Can call after a minimum of five years with APRA's approval

Incentive to redeem No step-ups or other incentives to redeem early Step-up in margin permitted

Ranking in a Winding Up Subordinated to claims of ordinary shareholders and

Additional Tier 1 capital holders1

Subordinated to claims of ordinary shareholders and hybrid

Tier 1 capital holders

Conversion or Write-Off at

Point of Non Viability (PONV)

• Conversion or permanent write-off in contractual terms

• Conversion or write-off only after Additional Tier 1 (some

or all as necessary to return to viability)

• Conversion is most likely principal loss absorption

mechanism due to tax inefficiencies of write-off alternative

• If Conversion is not possible, rights of Holders will be

terminated

Not applicable. However APRA has powers under the

Banking Act to direct banks not to make payment on Lower

Tier 2 instruments

PONV Trigger Event

• APRA notifies Westpac that it believes conversion or

write-off or a public sector injection of capital (or

equivalent support), is necessary because, without it,

Westpac would become non-viable

• No explicit APRA guidance regarding likely triggers. Non

viability could be expected to include serious impairment

of financial position, insolvency, capital ratios and liquidity

N/a

1. APRA requires that new Basel III compliant Tier 2 instruments must be the most subordinated claim in a winding-up after Common Equity Tier 1 and Additional Tier 1 instruments. As Westpac has old-style

perpetual "Upper Tier 2" instruments on issue that rank behind "old style" lower tier 2 instruments, any new Basel III Tier 2 instruments must rank equally with "old-style" upper Tier 2 instruments. Once all "old style"

lower Tier 2 instruments have been redeemed all Tier 2 instruments will rank equally.


US Canada UK Scandinavia Australia

Ranking Senior to

Tier 1 Capital

Senior to Additional

Tier 1 Capital


Tier 1 Capital


Tier 1 Capital


Tier 1 Capital

Step-ups Not permitted Not permitted Not permitted Not permitted Not permitted

Capital amortisation

20% p.a. beginning

5 years prior to

maturity (no credit

in final year)

20% p.a. beginning

5 years prior to

maturity (no credit

in final year)

20% p.a. beginning

5 years prior to

maturity (no credit

in final year)

20% p.a. beginning

5 years prior to

maturity (no credit

in final year)

4 years prior to

maturity on a

straight-line

amortised basis

Early redemption Tax Event /

Regulatory Event

Tax Event /

Regulatory Event

Tax Event /

Regulatory Event

Tax Event /

Regulatory Event

Tax Event /

Regulatory Event

Point of Non-Viability

Definition n.a. Regulatory

Discretion

Regulatory

Discretion

Regulatory

Discretion

Regulatory

Discretion

Approach n.a Contractual Statutory Statutory Contractual

Disclosure n.a Terms & Conditions Risk factor Risk factor Terms & Conditions

Primary loss

absorption

mechanism

n.a Conversion into ordinary

shares Write-down Write-down

Conversion into

ordinary shares

Tier 2 Capital comparison1,2

50

1. Source: UBS 2. For Westpac, the rating for a Basel III compliant Tier 2 instrument is anticipated to be A3 (Moody’s)/BBB+ (S&P).


33 31

23 19 17 19

31

73

30

20 24

16

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Risk management a key strength; Impairment charges 16bps of average gross loans

51

1,333

363

-24

342 290


1,959

1,093 1,017 870

557


New IAPs $330m lower, write-backs little

changed and recoveries $28m lower FY13/FY12

as portfolio quality improves in all divisions,

particularly in WIB and New Zealand

Lower new CAPs due mainly to fewer new Watchlist

and Substandard assets and reductions in the

stressed portfolio, particularly in St.George, offset

by a $26m increase in the economic overlay

342 290

870

57 (140)

(216)

(51) (15)

557

FY12 WRBB SGB WIB NZ Other FY13

Net change in

CAPs

New IAPs,

write-backs

and recoveries

Net change

in CAPs

New IAPs,

write-backs

and recoveries

Down 30%

1,212

847

1 2002-2005 reported under AGAAP; 2006 onwards reported on A-IFRS basis. Pre-2008 does not include St.George. 2 2008 and 2009 are pro forma including St.George for the entire period with 1H09 ASX Profit

Announcement providing details of pro forma adjustments. 3 Other includes BT, Westpac Pacific and Group Businesses.

Impairment charges to average gross loans1,2 (bps) Impairment charge movements ($m)

New CAPs2 ($m)

3

New IAPs, write-backs and recoveries2 ($m)


Standard and Poor’s risk grade Australia NZ / Pacific Americas Europe Asia Group % of Total

AAA to AA- 76,929 7,405 7,738 858 1,176 94,106 12%

A+ to A- 35,828 4,742 2,129 1,464 2,297 46,460 6%

BBB+ to BBB- 50,624 7,650 1,021 1,459 5,237 65,991 8%

BB+ to BB 57,678 7,907 351 142 1,112 67,190 8%

BB- to B+ 56,150 8,386 42 - - 64,578 8%

<B+ 8,547 1,987 39 137 - 10,710 1%

Secured consumer 376,013 39,963 - - 511 416,487 52%

Unsecured consumer 39,384 4,367 - - 33 43,784 5%

Total Committed Exposures 701,153 82,407 11,320 4,060 10,366 809,306

Exposure by region1 (%) 87% 10% 1% <1% 1% 100%

67

18

11

4

Housing

Business

Institutional

Other consumer 2

2 11

4

77

1

2

1

Cash and balances with central banks

Receivables due from other financial institutions

Trading securities, financial assets at fair value and available-for-sale securities Derivative financial instruments

Loans

Life insurance assets

Goodwill

Other assets

High quality portfolio with bias to secured consumer lending

Exposure by risk grade as at 30 September 2013 ($m)

Asset composition as at 30 September 2013 (%)

52

1 Exposure by booking office.

On balance sheet lending Total assets


0 20,000 40,000 60,000 80,000 100,000

Other

Mining

Accommodation, cafes & restaurants

Construction

Utilities

Transport & storage

Agriculture, forestry & fishing

Services

Property & business services

Government admin. & defence

Manufacturing

Wholesale & Retail Trade

Property

Finance & insurance

2H12 1H13 2H13

Exposures at default1 by sector ($m)

Diversification across industries and large exposures

53

1 Exposures at default represents an estimate of the amount of committed exposure expected to be drawn by the customer at the time of default and 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 Includes St.George from 2009 onwards. 6. Non-Bank Financial Institutions

3

2

4

2.0 2.0 1.9

1.4 1.3 1.1 1.2

1.3

2006 2007 2008 2009 2010 2011 2012 2013

• Top 10 single name exposures to corporations and non-bank financial

institutions (NBFIs) continues to be below 2% of TCE

• Largest corporation/NBFI single name exposure represents 0.3% of TCE

Top 10 exposures to corporations and NBFIs6 as a % of TCE5 (%)

0 300 600 900 1,200 1,500 1,800 2,100 2,400 2,700

BBB+

BBB-

A+

A-

A

A-

A

A+

A-

BBB

S&

P r

ati

ng

or

eq

uiv

ale

nt

Top 10 exposures to corporations & NBFIs6 as at 30 Sept 2013 ($m)

Represents undrawn

underwriting offer, to be

syndicated if offer is accepted


0.0

5.0

10.0

15.0

Ju

n-8

7

Ju

n-8

9

Ju

n-9

1

Ju

n-9

3

Ju

n-9

5

Ju

n-9

7

Ju

n-9

9

Ju

n-0

1

Ju

n-0

3

Ju

n-0

5

Ju

n-0

7

Ju

n-0

9

Ju

n-1

1

Ju

n-1

3

Income (Annual, %)

Commercial property portfolio comfortably within appetite

54

-20.0

-10.0

0.0

10.0

20.0

30.0

Ju

n-8

7

Ju

n-8

9

Ju

n-9

1

Ju

n-9

3

Ju

n-9

5

Ju

n-9

7

Ju

n-9

9

Ju

n-0

1

Ju

n-0

3

Ju

n-0

5

Ju

n-0

7

Ju

n-0

9

Ju

n-1

1

Ju

n-1

3

Capital returns (Annual, %)

1 Source: IPD Investment performance index Q2 2013. Analysis Westpac Property.

Capital growth largely in

assets offering secure medium

to long term income flow

Income return (yield)

steady to slight firming at

around average

55

19

17 9

Commercial offices & diversified groups

Retail

Residential

Industrial

18

12

7

7 7 9

40

NSW & ACT VIC

QLD SA & NT

WA NZ & Pacific

Institutional

Update

Update pie charts for 30 Sept 2013

63 61 54 53 50 48 51 51 52 54

9.6 9.1

8.0 7.7 7.1 6.5 6.9 6.8 6.7 6.6

-2

10

10

1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13

Commercial property exposure ($bn)

Commercial Property as % of TCE 16

11

8 6 5 9

45

NSW & ACT VIC

QLD SA & NT

WA NZ & Pacific

Institutional

56 18

17 9

Commercial offices & diversified groups

Retail

Residential

Industrial

12.5

15.2 15.5 13.7

11.7 9.7

7.7 6.4

4.5

2H

09

1H

10

2H

10

1H

11

2H

11

1H

12

2H

12

1H

13

2H

13

Commercial property portfolio TCE

classified as stressed (%) Market returns for commercial property stabilising1

Commercial property exposures size ($bn) and % of TCE Commercial property portfolio by sector and region (%)


• Unsecured consumer asset quality has

remained strong, as further interest rate cuts

have assisted debt serviceability and the

Group maintains a sound approach to credit

decisioning and underwriting

• Australian consumer unsecured

delinquencies fell 26bps to 106bps (down

7bps FY12/FY13) assisted by seasonal

trends and a strong focus on customer

engagement

• Australian credit card 90+ days

delinquencies were down 19bps to 93bps

(up 1bp FY12/FY13)

– The average payments to balance ratio

continued to trend upwards, increasing

105bps to 47.7% (up 227bps

FY12/FY13), reflecting ongoing

consumer caution towards debt

• Australian personal loan 90+ days

delinquencies were down 26bps to 106bps

(down 12bps FY12/FY13)

Australian unsecured lending portfolio performing well

55

Australian credit card average payments to balance ratio1 (%)

Australian unsecured lending 90+ days delinquencies (%)

1 Cards average payments to balance ratio is calculated using the average payment received compared to the average statement balance at the end of the reporting month.

39.7 39.8 41.4

45.6 45.2

42.7 43.8 43.7

44.6 44.7 45.3 45.4 46.6

47.7

1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13

-

0.50

1.00

1.50

2.00

2.50

3.00

Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13

Credit cards Personal loans Total unsecured lending


• Mortgage portfolio $37.5bn, up 4% FY12/FY13

• The distribution of the mortgage portfolio across regions is consistent with population

concentrations of New Zealand

• The proportion of variable rate mortgages reduced to 37% at 2H13 (down from 43% at 1H13)

• Loan origination through proprietary channel decreased to 74% for 2H13 (down from 77% at

1H13)

• Quality of portfolio remains high and well secured, with 80% of the portfolio having a LVR less

than 80%, up 125bps FY12/FY13

• Mortgage 90+ days delinquencies down 11bps FY12/FY13, reflecting improved origination and

stable employment levels

• Mortgage losses of 0.05% of the portfolio, down 4bps FY12/FY13

New Zealand mortgage portfolio

56

1 LVR based on current loan balance and current assessment of property value.

40

10 8

42

Auckland Wellington

Christchurch Rest of New Zealand

0<=60 60<=70 70<=80 80<=90 90<=95 95+

80% of mortgage portfolio

less than 80% LVR

0.0

0.5

1.0

1.5

1H

09

2H

09

1H

10

2H

10

1H

11

2H

11

1H

12

2H

12

1H

13

2H

13

Mortgages 90+ days past due

New Zealand

New Zealand mortgage portfolio by

region (%)

New Zealand mortgage portfolio LVR1

(%) of portfolio

0.0

0.5

1.0

1.5

1H

09

2H

09

1H

10

2H

10

1H

11

2H

11

1H

12

2H

12

1H

13

2H

13

Half year loss rate

Mortgage 90+ days delinquencies (%) Mortgage loss rates (%)


4.9

0

5

10

15

20

1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13

Impaired 90+ days past due well secured Watchlist & Substandard

• Business stressed exposures down 190bps in FY13 to 4.9% of TCE

– Down mostly across property, agriculture and manufacturing sectors

– Excluding Institutional assets, business stressed exposures reduced to

7.2%, down 330bps FY12/FY13

• Business impaired exposures 1.5% of Total Committed Exposures driven by

improvement in performance and settlement of one agri-business exposure

• Total provisions decreased, largely driven by transaction managed portfolio

decreasing resulting from a $96m partial write-off in 2H13

• Impairment charges down 39% FY12/FY13

– Asset quality has continued to improve, driven primarily by improvement

in Institutional stressed exposures

– Partially offset by Institutional provisions for a mining exposure

Improved asset quality in New Zealand business

57

1 Large reduction in stressed exposures from 2H11 to 1H12 due primarily to transfer of WIB assets during 1H12.

New Zealand

Down xx%

23

26

6

18

6

21

Property

Agriculture

Wholesale trade

Manufacturing

Cultural & Recreational Services

Other

1

Business stressed exposures as a % of New Zealand Business TCE (%)

Movement in impairment charges (NZ$m)

93

67

20

50

(0) (3) (34)

2H12 1H13 New IAPs Writebacks &

recoveries

Write-offs CAP changes &

other

2H13

Down 25%


• Westpac’s wholesale funding strategy is focused on diversity and

flexibility

• Able to issue in a broad range of formats, tenors and currencies,

including covered bonds

• Westpac is the only Australian bank that is SEC registered

− A comparative advantage over peers

− SEC registered deals are included in the index; have greater

reach into investor base, including retail investors; deliver greater

liquidity for investors and have a higher level of disclosure

requirements

− Westpac also maintains its ability to issue in US 144A format

Wholesale funding portfolio

58

1 At FX spot currency translation. 2 Based on spot FX currency translation. Includes all debt issuance with contractual maturity greater than 13 months, excluding US Commercial Paper. USD issuance includes

issuance in the US, Asia and other regions where USD buyers are located.

15

21

15 15

9

5

2 3

8 3 2

1

Domestic Certificates of deposits

Commercial Paper Medium term notes

Covered bonds Securitisation

Hybrids 144A

SEC Registered Samurai

Interbank deposits Other

34

35

13

10

2

6

AUD USD

EUR JPY

GBP Other

Wholesale funding composition1 as at 30 September 2013 (%)

Term wholesale funding by currency2 as at 30 September 2013 (%)


Appendix 1: Cash earnings adjustments

Cash earnings adjustment (A$m) FY13 FY12 2H13 1H13

Reported NPAT 6,816 5,970 3,512 3,304

TPS revaluations 9 27 1 8

Treasury shares 42 27 13 29

Ineffective hedges (20) (7) 3 (23)

Fair value gain/(loss) on economic hedges and own credit (10) 7 (67) 57

Buyback of government guaranteed debt 43 (5) - 43

Fair value amortisation of financial instruments 67 46 35 32

Amortisation of intangible assets1 150 151 75 75

Supplier program - 139 - -

Litigation provision - 78 - -

TOFA tax consolidation adjustment - 165 - -

Cash earnings 7,097 6,598 3,572 3,525

1. Amortisation of intangible assets reflects the amortisation of St.George intangible assets including the core deposit intangible and credit card and financial planner relationships as well

as intangible assets (management contracts) related to the JOHCM acquisition


FY13 Segment Results (A$m)

Westpac

Retail &

Business

Banking

St.George

Banking

Group

BT

Financial

Group

(Australia)

Westpac

Institutional

Bank

New

Zealand

Pacific

Banking

Group

Businesses Group

Reported NPAT 2,300 1,313 715 1,635 634 143 76 6,816

TPS revaluations - - - - - - 9 9

Treasury shares - - - - - - 42 42

Ineffective hedges - - - - - - (20) (20)

Fair value gain/(loss) on economic hedges

and own credit - - - - - - (10) (10)

Buyback of government guaranteed debt - - - - - - 43 43

Fair value amortisation of financial

instruments1 - - - - - - 67 67

Amortisation of intangible assets2 - 128 22 - - - - 150

Supplier program - - - - - - - -

Litigation provision - - - - - - - -

TOFA tax consolidation adjustment - - - - - - - -

Cash earnings 2,300 1,441 737 1,635 634 143 207 7,097

1 Amortisation of fair value adjustments recognised on merger with St.George 2 Amortisation of intangible assets reflects the amortisation of St.George intangible assets including the

core deposit intangible and credit card and financial planner relationships in as well as intangible assets (management contracts) related to the JOHCM acquisition

60

Appendix 2: Cash earnings adjustments by segment


Appendix 3: APRA to BCBS Basel III reconciliation

• The Australian Prudential Regulation Authority (APRA) has maintained the conservative stance adopted under its Basel III capital standards,

resulting in a significant variance between capital measured under APRA and fully harmonised Basel III

• Key differences in the calculation of Common Equity Tier 1 ratios between APRA’s Basel III and fully harmonised Basel III under Basel Committee

on Banking Supervision (BCBS) are detailed below

Description

Common

equity tier 1

ratio

Westpac’s Common equity Tier 1 ratio under APRA Basel III 9.10%

Under BCBS, supervisors have the option of applying concessional thresholds when determining the capital requirements of deferred tax assets,

investments in non-consolidated subsidiaries (NCS) and equity investments in commercial entities held in the banking book. Risk weighted asset

treatments apply in lieu of common equity deductions if these items are individually less than 10% and together less than 15% of common equity. To

the extent the amounts are greater than the concessional thresholds, common equity deductions apply

APRA has chosen not to apply this concessional treatment and requires a 100% deduction from common equity for deferred tax assets, investments

in non-consolidated financial institutions, NCS, equity investments, and all under-writing positions in financial and commercial institutions held for more

than 5 business days

Westpac’s common equity tier 1 ratio would increase if APRA applied concessional thresholds

+126bps

Mortgage risk weights under APRA are based on a minimum loss given default (LGD) of 20% whereas BCBS sets a minimum LGD of 10%. The

actual LGD used must be supported by historical data but APRA’s higher minimum means that Australian mortgage risk weights are typically higher

than those calculated using the lower BCBS LGD minimum

+77bps

APRA applies a risk weighted asset requirement to Interest rate risk in the banking book (IRRBB). This is not currently considered under BCBS

standards +21bps

Other differences, including treatment of specialised lending +22bps

Westpac’s fully harmonised Basel III Common equity Tier 1 ratio under BCBS 11.56%


Appendix 4: Definitions

Asset quality

Stressed

loans

Stressed loans are Watchlist and Substandard, 90 days past due well

secured and impaired assets

Impaired

assets

Impaired assets can be classified as

1. Non-accrual assets: Exposures with individually assessed impairment

provisions held against them, excluding restructured loans

2. Restructured assets: exposures where the original contractual terms

have been formally modified to provide concessions of interest or

principal for reasons related to the financial difficulties of the customer

3. 90 days past due (and not well secured): exposures where contractual

payments are 90 days or more in arrears and not well secured

4. other assets acquired through security enforcement

5. any other assets where the full collection of interest and principal is in

doubt

90 days past

due - well

secured

A loan facility where payments of interest and/or principal are 90 or more

calendar days past due and the value of the security is sufficient to cover

the repayment of all principal and interest amounts due, and interest is

being taken to profit on an accrual basis

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

Individually

assessed

provisions

or IAPs

Provisions raised for losses that have already been incurred on loans that

are known to be impaired and are individually significant. The estimated

losses on these impaired loans will be based on expected future cash flows

discounted to their present value and as this discount unwinds, interest will

be recognised in the statement of financial performance

Collectively

assessed

provisions

or CAPs

Loans not found to be individually impaired or significant will be collectively

assessed in pools of similar assets with similar risk characteristics. The size

of the provision is an estimate of the losses already incurred and will be

estimated on the basis of historical loss experience of assets with credit

characteristics similar to those in the collective pool. The historical loss

experience will be adjusted based on current observable data

Financial performance

Core earnings Operating profit before income tax and impairment charges

AIEA Average interest earning assets

Net interest

spread

The difference between the average yield on all interest bearing

assets and the average rate paid on all interest bearing liabilities

Net interest

margin Net interest income divided by average interest earning assets

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

Wealth and

Home and

Contents

Penetration

Metrics

Data based on Roy Morgan Research, Respondents aged 14+.

Wealth penetration is defined as the number of Australians who

have Managed Investments, Superannuation or Insurance with

each group and who also have a Deposit or Transaction Account,

Mortgage, Personal Lending or Major Card with that group as a

proportion of the total number of Australians who have a Deposit or

Transaction Account, Mortgage, Personal Lending or Major Card

with that group. Home and Contents penetration is defined as the

number of Australians who have Household Insurance (Building,

contents and valuable items) within the Group and who also have

a Deposit or Transaction Account, Mortgage, Personal Lending or

Major Card with that group as a proportion of the total number of

Australians who have a Deposit or Transaction Account, Mortgage,

Personal Lending or Major Card with that group. 12 month

average to Sep 2013. WRBB includes Bank of Melbourne (until Jul

2011), BT, Challenge Bank, RAMS (until Dec 2011), Rothschild,

and Westpac. St.George includes Advance Bank, Asgard,

BankSA, Bank of Melbourne (from Aug 2011), Dragondirect,

Sealcorp, St.George and RAMS (from Jan 2012). Westpac Group

includes Bank of Melbourne, BT, Challenge Bank, RAMS,

Rothschild, Westpac, Advance Bank, Asgard, BankSA, Barclays,

Dragondirect, Sealcorp and St.George


Contacts

Curt Zuber

Treasurer, Westpac Banking Corporation

+61 2 8253 4230

[email protected]

Joanne Dawson

Deputy Treasurer, Westpac Banking Corporation

+61 2 8204 2777

[email protected]

Guy Volpicella

Executive Director, Structured Funding and Capital

+61 2 8254 9261

[email protected]

Philip Christie

Director, Global Funding

+61 2 8253 4314

[email protected]

Alexander Bischoff

Director, Global Funding

+61 2 8253 4314

[email protected]

Jacqueline Boddy

Senior Manager, Debt Investor Relations

+61 2 8253 3133

[email protected]

For further information For further information go to:

www.westpac.com.au/investorcentre

and click on ‘Fixed income investors’

or visit our Bloomberg page ‘WBCT’

WESTPAC FULL YEAR 2013 INVESTOR UPDATE...2.5 17 2.2 1.6 FY10 FY11 FY12 FY13 FY10 80 7777 8380 84 20 23 17 16 FY11 FY12 FY13 Stable funding Wholesale funding

Documents

WESTPAC FULL YEAR 2013 INVESTOR UPDATE...2.5 17 2.2 1.6 FY10 FY11 FY12 FY13 FY10 80 7777 8380 84 20 23 17 16 FY11 FY12 FY13 Stable funding Wholesale funding