Westpac Banking Corporation · ASX:WBC

Westpac Banking — Westpac New Zealand — Debt Investor Presentation (September 2023)

31 slides from Westpac Banking's debt investor presentation, September 2023

  1. Slide 1: Westpac New Zealand Limited

    Westpac New Zealand Limited The material contained in this presentation should not be reproduced, distributed or transmitted to any person without consent of Westpac New Zealand Limited. September 2023 Classification: PROTECTED

  2. Slide 2: Westpac New Zealand Limited overview

    • Westpac New Zealand Limited (“WNZL”) has material market share positions and is • A core market for Westpac Banking Corporation (“WBC”) following the conclusion of one of NZ’s largest banks, identified as a Domestic Systemically Important Bank (D- an ownership review in 2021. SIB) by the RBNZ. • T

  3. Slide 3: New Zealand economic forecasts

    2021 2022 2023F 2024F 8 Pandemic 8 Real GDP growth (% year total) 6.0 2.7 1.1 0.3 6 Pre-pandemic average 6 2012 to 2019: +3.3% Inflation (% year end) 5.9 7.2 4.9 2.9 Forecast average 4 2023 to 2025: 4 +1.2% Unemployment (%) 3.2 3.4 4.3 5.2 2 2 House prices (% year end) 27.1 -11.2 -1.0 7.7 0 0 Source

  4. Slide 4: House price outlook and October election

    ▪ Following sharp falls over the past year, house sales and prices have 35 % % 35 found a base in recent months. 30 Quarterly % change Forecast 30 ▪ We have revised up our forecasts for house price growth. We now 25 20 Annual % change 25 20 expect prices across the country to rise by an average of 7

  5. Slide 5: Net Profit After Tax and key financial metrics

    FY19 FY20 FY21 FY22 1H236 NPAT (NZ $m) Net interest margin (%) Net interest margin 1 2.14 1.90 1.95 2.01 2.22 2.14 2.01 2.22 1.95 1.90 Cost to income2 42.3 48.6 47.7 44.2 43.5 964 Customer deposit to loan ratio3 76.6 80.7 82.0 80.4 81.2 931 1,047 Stressed exposures to TCE4 1.63 1.57 1.17 0.95 1.31 5

  6. Slide 6: Residential mortgage portfolio

    Total portfolio1 $65.3b 1.00% 0.80% 0.60% Fixed / Floating (%) 91 / 9 0.40% 0.29% 0.20% Owner occupied (%) 73.7 0.00% Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Investment property loans (%) 26.3 Broker introduced (%) 51.1 93% of portfoli

  7. Slide 7: Sustainability priorities and progress

    Sustainability Priorities What 2025 Targets* FY22 Progress and HY23 Highlights We want to support ❑ Reduce annual Scope 1, 2, and Scope 3 ❑ Operational emissions reduced by 45.7% for year ended 30 June 2022 against a 2019 base year Aotearoa’s transition to a Mandatory operational emissions by 30% ❑

  8. Slide 8: Regulatory capital ratios

    Regulatory Prudential Regulatory CET1 AT1 Tier 2 Minimum capital buffer Minimum WNZL (“PCB”)1 (incl. PCB) 17.1 18.6 15.9 2.0 13.9 Common Equity Tier 1 2.1 13.7 4.5% 3.5% 8.0% 11.1% 2.0 2.8 (“CET1”) capital ratio 2.7 0.9 1.0 2.6 2.0 1.6 Tier 1 capital ratio (CET1 plus 6.0% 3.5% 9.5% 12.7% Additional

  9. Slide 9: RBNZ capital requirements for D-SIBs

    CET1 AT1 Tier 2 • The RBNZ increased total capital requirements for D-SIBs to 18.0% of RWA from 10.5%. The phased increase in capital buffers began on 1 July 2022 and ends on 1 July 20281. 18.0 o Tier 1 capital requirement of 16.0% of RWA 2.0 Eligible Tier 1 capital comprises common equity and redee

  10. Slide 10: Liquidity: mismatch ratio and LCR

    Key metrics Details WNZL 1H23 • The RBNZ Banking Standard 13 (BS13) mismatch ratio is a measure of a bank’s liquid assets, adjusted for expected cash inflows and Mismatch Ratio (MMR) outflows during a 1-month or 1-week period of stress with a regulatory minimum of 0%. 9.0% 1-month and Liquidity • Th

  11. Slide 11: Funding profile and programmes

    NZ$bn FY19 FY20 FY21 FY22 1H23 1H23 % Funding programme Currency5 Customer Deposits 64.5 71.0 75.9 77.9 79.8 74.2 Domestic Medium Term Notes (DMTN) 2 0.3 9 NZD 18 Wholesale Onshore <1yr 1.1 3.0 3.5 2.9 2.8 2.6 10 NZ Certificates of Deposit USD 3 Wholesale Offshore <1yr 2.3 2.5 3.0 5.5 3.9 3.6 Non-Do

  12. Slide 12: Funded liquid assets

    Funded Liquid Assets Internal RMBS 26.5 Additional RMBS (lhs) BS13 Liquid Assets (lhs) 24.0 24.7 22.9 6.2 7.4 Loans (lhs) BS13 Liquids / total loans (rhs) 14.8 8.6 11.1 $bn 5.8 30% 17.3 20.3 15.4 120 9.0 11.8 FY19 FY20 FY21 FY22 1H23 100 25% 80 60 20% Cash 23 NZ Government securities 40 42 NZ Local

  13. Slide 13: Covered bond programme

    Classification: PROTECTED

  14. Slide 14: Covered bond programme summary

    Issuer Westpac Securities NZ Limited, London Branch Group Guarantor Westpac New Zealand Limited Group Guarantor Rating AA-/A1/A+ by S&P / Moody’s / Fitch Format Legislative Covered Bond registered with the Reserve Bank of New Zealand Covered Bond Rating Aaa / AAA by Moody’s / Fitch Programme Size €5

  15. Slide 15: Cover pool characteristics

    • First ranking mortgage registered under the New Zealand Real Property Legislation Total Pool Loan Balance1 NZ$6,237,960,228 • All loans are secured by a mortgage over land and a completed residential dwelling Number of Loans 34,245 • All residential mortgages are denominated and payable in New Zea

  16. Slide 16: Covered bond structure diagram

    Westpac Westpac NZ Westpac Banking 1 Corporation (WBC) New Zealand Covered Bond 8 Limited (WNZL) Limited (CBG) Covered Bond Swap Provider Seller, Group Guarantor, & 2 Covered Bond Interest Rate Swap Provider Guarantor 7 8 Westpac Securities 3 NZ Limited (WSNZL) 4 Issuer 1. Loans sold by WNZL to CBG

  17. Slide 17: Covered bond structure features

    Structure Covered Bonds are issued by Westpac Securities NZ Limited, and guaranteed by WNZL (AA-/A1/A+) , backed by an unconditional and irrevocable guarantee by the Covered Bond Guarantor (Westpac NZ Covered Bond Limited), which is limited in recourse to its assets. Security Security comprises a hi

  18. Slide 18: Appendix

    Classification: PROTECTED

  19. Slide 19: Why we are here

    WHY we are here WHAT we want to be known for WHAT makes us different 19 Classification: PROTECTED

  20. Slide 20: Assets, liabilities and equity

    Assets FY19 FY20 FY21 FY22 1H23 Residential Mortgages Other Retail Corporate Other Advances to customers 84,160 87,959 92,632 96,882 98,209 0.1 0.1 0.1 0.1 0.2 Cash and liquid assets1 7,994 11,818 15,432 18,561 20,237 34.5 33.8 31.3 31.3 31.0 4.4 3.7 3.2 2.9 2.8 Other assets2 1,951 2,321 2,482 1,769

  21. Slide 21: Lending exposures and impairments

    FY22 1H23 %TCE vs FY22 Total provisions for ECL on loans and commitments ($m) Impairment expense/(benefit) ($m) $bn 657 589 Consumer lending1 80.2 81.5 55.0% 1.6% 525 439 352 Business lending 65.4 66.7 45.0% 1.9% 154 -10 320 -27 Non-Institutional2 27.2 26.7 18.0% -2.0% -84 Institutional 38.2 40.0 27

  22. Slide 22: Agriculture, property and dairy exposures

    Sep-22 Mar-23 Sep-22 Mar-23 Total committed exposure (TCE) ($bn) 9.8 9.7 Total committed exposure (TCE) ($bn) 9.4 9.5 Agriculture as a % of total TCE1 6.7 6.6 Property as a % of total TCE 6.5 6.4 % of portfolio graded as ‘stressed’2 4.9 5.9 % of portfolio graded as ‘stressed’2 1.7 3.0 % of portfolio

  23. Slide 23: New Zealand economy

    Classification: PROTECTED

  24. Slide 24: New Zealand GDP and employment by region and sector

    Nationwide GDP: NZ$380bn GDP by sector 2022 (%)2 Population: 5.1mil Other 11% Primary industries 6% Construction 7% Total nominal GDP 2019: Northland, $303bn $9bn Social services (incl. health Utilities 3% 4% of population and education) 10% Auckland, $136bn Bay of Plenty, $22bn Manufacturing 8% 33%

  25. Slide 25: Economic conditions are cooling

    ▪ Economic conditions are cooling, and a period of subdued growth is 8 Pandemic 8 expected over the coming years. ▪ GDP fell by 0.8% in the six months to March. 6 Pre-pandemic average 2012 to 2019: +3.3% 6 ▪ GDP growth is set to average around 1.2% per annum over 4 Forecast average 2023 to 2025: 4 t

  26. Slide 26: Inflation and OCR outlook

    8 8 ▪ Inflation has slowed to 6% in the year to June, down from rates of over Source: Stats NZ, Westpac Forecast 7% last year. However, while inflation is ‘lower’, it is not ‘low’. ▪ 6 6 Underlying inflation pressures remain strong. Most measures of core inflation (which track the underlying trend i

  27. Slide 27: Mortgage rate rolls and household spending

    ▪ Large numbers of borrowers have now rolled onto higher rates. The $bn 32 $bn 32 average interest rate on outstanding residential mortgages is Nominal spending levels estimated to have risen by around 140 bps since mid-2022. 30 30 ▪ As borrowers continue to roll on to higher fixed rates, the averag

  28. Slide 28: Economic forecast tables

    GDP components Quarterly % change Annual average % change Jun-23 Sep-23 Dec-23 Mar-24 2021 2022 2023 2024 GDP (production) 0.8 0.1 0.0 0.0 6.0 2.7 1.1 0.3 Private consumption -1.1 0.5 0.4 0.3 7.5 3.0 1.3 1.2 Government consumption -0.2 -0.3 0.3 -0.5 8.2 4.5 -2.0 -0.3 Residential investment -0.5 -0.9

  29. Slide 29: Contacts

    Ben Turner Liam Cleary Treasurer Executive Director, Head of Funding Westpac New Zealand Limited Balance Sheet and Securitisation 16 Takutai Square Westpac New Zealand Limited Auckland 1010, New Zealand 16 Takutai Square Phone: (64 9) 348 9995 Auckland 1010, New Zealand Email: [email protected].

  30. Slide 30: Important notice

    The material contained in this presentation is general background information on Westpac Securities NZ Limited (“WSNZL”), and Westpac New Zealand Limited (“WNZL”) current as at September 2023 unless otherwise specified. By attending or reading the presentation (as applicable), you are deemed to have

  31. Slide 31: Forward-looking statements

    Forward-looking Statements This presentation contains certain forward-looking statements. WNZL cautions readers that no forward-looking statement is a guarantee of future performance and that actual results or other financial condition or performance measures could differ materially from those conta

Westpac New Zealand — Debt Investor Presentation (September 2023) on 6ix