domestic roadshow july 2001 #2 - Westpac · SGD Market ü ü ü HKD Market ü ü ü Uridashi -...
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Debt Investor Update Debt Investor Update Debt Investor Update 2001 Phil Chronican Chief Financial Officer
Transcript of domestic roadshow july 2001 #2 - Westpac · SGD Market ü ü ü HKD Market ü ü ü Uridashi -...
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Debt Investor Update
2001
Phil Chronican
Chief Financial Officer
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Delivering New ValueDelivering New Value
1. Customer centric focus
- CRM/Deepening customer relationships2. Being more efficient
- Efficiency initiatives directly linked to our focus on value creation3. e-Transformation
- Initiatives including e-Enablement, Internet & e-Procurement
4. Risk Management- Well diversified book, strong provisioning and low impaired assets
5. Strategic directions
- In-market acquisitions/Bancassurance
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Financial Performance - Half Year 2001Financial Performance - Half Year 2001
653 666 676 701755
818
897924
500
600
700
800
900
1,000
2H97 1H98 2H98 1H99 2H99 1H00 2H00 1H01
30
35
40
45
50
55
NPAT pre abn EPS pre abn
Net Profit after tax & EPScents$m
NPATCAGR4%
14%
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Financial Performance - Half Year 2001Financial Performance - Half Year 2001
362 386
308
397
493
565 584
272
100
200
300
400
500
600
2H97 1H98 2H98 1H99 2H99 1H00 2H00 1H01
14.0
16.0
18.0
20.0
22.0
EP ROOE
Economic Profit &Return on Ordinary Equity %$m
# Would have been $451m if dividend had been fully franked.
#
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Delivering on performance goalsDelivering on performance goalsMeasure Target Progress
EPS growth Above peer avg. (8.6%) * 19%
Return on Capital 5% > Cost of cap (12%) 20.9%
TSR (rolling 3 yr) Top (1st)quartile 52ndpercentile
Efficiency ≤ Peer avg. (54.6%) * Ø 52.2%
Risk Profile AA- rating Maintained
Capital Tier 1 – 6.0 - 6.5%TOE/RAA – 5.6 - 5.8%
6.1%5.7%
* As at 31 March 2001 - except 1) CBA, as at 31/12/00 half year result and 2) NAB avg. ofbrokers’ forecasts to 31 March 2001.
Ø Excluding abnormals.
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Performance recognised by thePerformance recognised by themarketmarket
Australian Peergroup Banks Share Price Trading
80
100
120
140
160
180
28-Jun-00 28-Aug-00 28-Oct-00 28-Dec-00 28-Feb-01 28-Apr-01 28-Jun-01
Per Base100.00
ANZ AU CBA AU NAB AU WBC AU ASX Bank Index
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Sound Capital PositionSound Capital Position
* Target range
7.1
6.3
5.7
7.26.6
6.1
4.04.55.05.56.06.57.07.58.0
TOE / RAA Tier 1 ratio
1H00 2H00 1H01
%
6.5 - 6.0% *
5.8% -5.6% *
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Investor ScorecardInvestor Scorecard
1.2
1.4
1.6
1.8
2.0
2.2
2H97 1H98 2H98 1H99 2H99 1H00 2H00 1H01
2.5
2.75
3
3.25
3.5
3.75
Net interest income WBC avg. margin
Net interest incomeNet interest incomeMargin (%)$b Expense to income*Expense to income*%
* Excludes goodwill
50
52
54
56
58
60
62
1H98 2H98 1H99 2H99 1H00 2H00 1H01
28,000
30,000
32,000
34,000
36,000
Expense/income FTE (implied)
FTE
27.0
14.6
8.95.6 5.0
3.1 3.15.6
0
5
10
15
20
25
30
Sep-94 Sep-95 Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Mar-01
Net impaired assets to equityNet impaired assets to equity& general provision& general provision
6288
137
183 188
233249
182
0
50
100
150
200
250
300
Sep-94 Sep-95 Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Mar-01
Total provisions to total impairedTotal provisions to total impairedassetsassets
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Strong credit ratings - stable outlookStrong credit ratings - stable outlook
• Outlook: Stable (Moody’s & S&P)
“..reflects S&P’s expectation that despite tight competition will continue tomaintain sound market position and market profile..”
External Debt Ratings
Moody’s/S&P Long-term ratings
1993 1994 1995 1996 1997 1998 1999 2000
Aa3/AA-
A1/A+
A2/A+
2001
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Debt Investor Update
2001 - Global Funding
Andrew Smith
Head of Global Funding & Capital Management
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Continued changes in the globalContinued changes in the globalcapital marketscapital markets
DE
MA
ND
SID
E SU
PP
LY
SID
E
• More issuers accessingcapital markets/fewercurrencies
• Disintermediation intraditional funding sources
Capital RaisingMarketplace
•Increased volatility
•More information flows
•Greater linkages between markets
•Technology changes
• Changing Investorpreferences, increased focuson:
• relative value• transaction liquidity
• Lower appetite for underwriting risk
• Consolidation - smaller number ofintermediaries and dealers withfewer but closer issuer relationships
GLOBAL CAPITALMARKETS
INTERMEDIARIES
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Westpac is faced with an increasingWestpac is faced with an increasingwholesale funding taskwholesale funding task
22.9 2432.4 36.8 40
20.9 23.124.5
37.640.5
0
20
40
60
80
100
120
140
160
'Sep-97 'Sep-98 'Sep-99 'Sep-00 'Mar-01
$ bl
n
Wholesale Funding (On-shore) Wholesale Funding (Off-shore) Total Funding
50.8
61.1
57.3
Retail Deposits
Source : Westpac March 2001
59.2
64.5
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Our response has been to diversify byOur response has been to diversify bymarket and productmarket and productMarket Outstandings 1996 1997 1998 1999 2000 2001
AUD Domestic ü ü ü ü ü üNZD Domestic ü ü ü ü ü üMBS ü ü ü ü ü üEuro US$ FRN ü ü ü ü ü üEuro US$ Fixed ü ü ü ü üGBP FRN ü ü ü ü üEuro NZD/AUD ü ü ü üCHF Fixed ü ü ü üEuro Euro FRN ü ü üSGD Market ü ü üHKD Market ü ü üUridashi - Japanese Retail ü ü ü¥ Global Note ü üEuro Euro Fixed
Samurai
GBP £ Fixed
Review of global termissuance in:•1997/8 - A$3.9bn
•1998/9 - A$5.8bn
•1999/00 - A$5.5bn
•2000/01 - A$5.7bn (YTD)
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AUD domestic funding is a key part ofAUD domestic funding is a key part ofour wholesale liability portfolioour wholesale liability portfolio
US$38%
Other10%
NZ$8%
A$44%
Total wholesale funding portfolio
Source: Westpac Outstandings March 2001
Securitisation 6%
Euro $A1%
Uridashi $A1%
Domestic Term Debt $A
2%
NCD's9%
Commercial Paper1%
Deposits34%
Acceptances46%
A$ component by product
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The domestic term market continuesThe domestic term market continuesto evolveto evolve
1999 - % of new issuance29%
16%
21%28%
6%
Australian financials Australian corporates Kangaroos
MBS ABS
2000 - % of new issuance
35%
14%
15%2%13%
2%19%
Australian financials Australian corporates Australian public sectorKangaroos Credit Wrapped MBSABS
2001 - % of new issuance 17%
9%35%
7%
29%
3%
Australian financials Australian corporates Kangaroos
Credit Wrapped MBS ABS
1998 - % of new issuance13%
16%7%
28%
36%
Australian financials Australian corporates Kangaroos
MBS ABS
Source: Westpac
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Our ongoing commitment to theOur ongoing commitment to thedomestic marketdomestic market
• Last year’s objective• $1.0bn of term funding; and• Maximise A$ short dated issuance
AUD$500mFixed RateNote - due
March 2003
Lead ManagerWestpac
Institutional Bank
AUD$350mSubordinated
Note - dueMay 2008
Lead ManagerWestpac
Institutional Bank
AUD$300mSubordinated
Note - dueMarch 2009
Lead ManagerWestpac
Institutional Bank
AUD$350mSubordinated
Note - dueAugust 2010
Lead ManagerWestpac
Institutional Bank
AUD$300mFixed RateNote - dueJuly 2005
Lead ManagerWestpac
Institutional Bank
• Outcome• Increased short dated issuance by 17%• $550m of term debt
• 2001/02• Anticipate $750m - $1.0bn of term issuance in 2001/02
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Westpac’s approach to fundingWestpac’s approach to funding
• Timing is largely driven by best execution - a function ofcapacity & investor demand
• Westpac has a long-term commitment to its investors. Wedemonstrate this in the way we bring issues to market:• well placed bond at primary stage; and• monitor price performance in the secondary market
• Regular contact with debt investors - consistent & transparentdisclosure and responding to feedback & suggestions
• Our approach is also a reflection of sound liability management
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