Westpac Full Year Results 2002 · 2 Full year results - 2003 Delivering on our focused strategy •...
Transcript of Westpac Full Year Results 2002 · 2 Full year results - 2003 Delivering on our focused strategy •...
Westpac Full Year Results 2003
David Morgan Chief Executive OfficerPhilip Chronican Chief Financial Officer
30 October 2003
2 Full year results - 2003
Delivering on our focused strategy
• High quality result- Underlying cash earnings $2,271m up 10%- Cash return on equity maintained at 21%- Dividend of 78 cents per share fully franked up 11%
• Key drivers of growth- Robust growth in loans and acceptances up 17%- Normal sector margin decline down 7 bps- All business units delivering improved performance
• Quality of earnings continues to improve- No significant items in 2003- Improved asset quality: impaired assets to total
loans & acceptances down 13 bps
• Strategy is delivering
3 Full year results - 2003
Driving the gap between revenue and expenses
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1H99
2H99
1H00
2H00
1H01
2H01
1H02
2H02
1H03
2H03
Revenue 7.5%
Expenses 3.5%
Core earnings 12.5%
$m
1 Underlying basis (excl. significant items)2 Excluding goodwill
4 Year CAGR1
2
4 Full year results - 2003
All businesses contributing
15%
48%
14%
40%
0 20 40 600 500 1000 1500
NZ Banking
InstitutionalBank
WealthMgmt
Business &ConsumerBanking
2003 2002
Cash earnings1
$m
Growth 2002 – 2003
1 Excluding significant items
54%
8%
17%
14%
Proportion of Group
Contribution
%
5 Full year results - 2003
A high quality result – getting the balance right
• ROE maintained at 21%EPS growth 9%
BalanceOutcome
Maintained leading sustainability position
Expense to income ratio down 50 bps
Strong loan growth
90 basis point improvement in market share in Australia
• Achieving returns for all stakeholders
• While enhancing investment spend
• Absorbing restructuring charges as a normal expense
• Margin decline in line with sector trend- down 7 bps
• Fee income stronger
• Asset quality further improved
6 Full year results - 2003
Dividends up 11% on 2002 - fully franked
Cents per share
43 4754
6270
78
39
0102030405060708090
1997 1998 1999 2000 2001 2002 2003
7 Full year results - 2003
Delivering on our strategy
Differentiator: Superior Execution
Our high performance culture:� Quality people� Effective people &
performance management processes
� Values
Medium termObjectives
� Best practice employee commitment
� Service leadership in our industry
� Top quartile shareholder returns
� Leader in corporate responsibility
Strategy How? OutcomesVision“To be a great
Australian and NZ Company”
Customer Focus
� A great place to work� A superior customer
experience� 1st quartile shareholder returns� A good corporate citizen
Service – Profit Chain
Internal Service Quality
Employee Commitment
Employee Retention
Employee Productivity
Superior Customer
Experience
Customer Satisfaction
Customer Loyalty
Revenue Growth
Profitability
Shareholder Value
Employee Customer ShareholderMission“To be at the forefront for service in our industry by
September 2005”
ValuesTeamwork
IntegrityPerformance
‘Ask Once’
8 Full year results - 2003
Strategy reflected in earnings
• Focus on core markets
• Delivering on the service-profit chain- Employee commitment- Customer experience
• Superior execution
9 Full year results - 2003
Focus on core markets delivers
• Australia and New Zealand remain highly attractive banking markets- Australia credit growth 14%- New Zealand credit growth 7%
• Customer focused strategy delivering market share improvement
• Businesses focused on core markets – no diversion
• Wealth integration progressing quickly and smoothly
10 Full year results - 2003
Well advanced in improving employee commitment
0
20
40
60
80
100
Employee Commitment Leadership Employee engagementand effort*
2000200120022003
% of employees reporting a positive score
* New measure introduced in 2002
11 Full year results - 2003
Customer satisfaction improving
Consumer Satisfaction - % of main financial institution customers very or fairly satisfied
50%
52%
54%
56%
58%
60%
62%
64%
66%
68%
70%
Jun 01 Dec 01 Jun 02 Dec 02 Jun 03
Bank X Westpac Bank Y Bank Z
SME satisfaction - total satisfied
40%
45%
50%
55%
60%
65%
Dec-01 Jun-02 Dec-02 Jun-03
Bank X WBC
Bank Z Bank Y
Middle Market Satisfaction - total satisfied
40%
45%
50%
55%
60%
65%
70%
75%
Dec-01 Jun-02 Dec-02 Jun-03
Bank X WBCBank Z Bank Y
Source: Consumer - Roy Morgan Research. Have deposit account with bank and regard it as MFI. Business - TNS Business Finance Monitor
12 Full year results - 2003
Improved customer experience leading to increased market share
3013.213.5Total deposits
Credit(30)18.117.8Housing
14.7
11.812.3
Aug 03%
9013.8Total credit
14010.4Other (mainly business)14010.9Personal
Change(bps)
Sep 02%
Australian market share –RBA financial system aggregates
13 Full year results - 2003
Growth in our wealth products has also been solid
Outflow59.7%Retail
NA8.4%215.3%Margin lending
410.2%76.3%Life and risk
211.8%510.5%Wrap & master trust
312.5%85.4%Corporate super
RankMarket share
RankMarket share
ProductNew business
Sources: ASSIRT, Dexx&r and RBA
14 Full year results - 2003
Execution – delivering on our commitments
WIB
NZ
BCB
BT
GroupStatusCommitment
Restore Institutional Bank’s performance
Deliver on transformation program
Deliver transformation program
Reacquire AGC portfolio
Deliver on budgeted synergies
Enhance investment performance
Grow Wrap and corporate super
Cash EPS guidance 7% to 9% - October 2002
Disciplined acquisition approach
Financial markets income up 29%
New brand, lending up 14%, customer satisfaction higher
$50m in ongoing cost savings
Virtually all of the portfolio reacquired – one year ahead of schedule
Synergies upgraded and delivered
Performance ahead of benchmark
Growth momentum maintained
Delivered 9.3% .
Withdrew from NBNZ sale
15 Full year results - 2003
Reputation/sustainability – enhancing returns
Sustainability - supporting the value chain
Employees Customers Returns
Number 1 In the global banking sector in Dow Jones Sustainability Index 2003/04 - for the second year in a row.
Australia Number 1 company overall – RepuTex Social Responsibility Ratings 2003. Only company to receive a AAA rating.
• Improved employees retention
• Enhanced ability to attract quality staff
A company where people want to work
• Ethical and responsible• Trustworthy• Increased customer
satisfaction
An institution customers want to do business with
• Enhanced employee productivity
• Improve customer share of wallet
Enhance sustainability of returns
The Details
Philip Chronican Chief Financial Officer
30 October 2003
17 Full year results - 2003
Earnings terminology – cash earnings
Cash earnings - strips out hybrid distributions, adds back goodwill amortisation
Reported - includes everything
Underlying - removes individually significant items in 2002
Ongoing - adjusted for acquisitions and AGC divestment
Focus on cash underlying, given:
• Significant items in 2002 were non-recurring
• Base on which dividends are determined
• No impact on 2003 numbers
Ongoing earnings used to highlight organic growth
18 Full year results - 2003
Underlying cash earnings – full year
106,6647,330Net operating income
102,0632,271Cash earnings(56)(48)(75)Preference dividends(63)100163Goodwill
92,0112,183Net profit after tax & OEI(8)
(728)2,919(485)(163)
(3,763)
2003
(60)(5)Outside equity interests(15)(635)Tax
102,651Net profit before tax(5)(461)Bad debts
(63)(100)Goodwill(9)(3,452)Operating expenses
% Change2002$m
19 Full year results - 2003
Underlying cash earnings – half on half
73,5373,793Net operating income
71,0951,176Cash earnings(21)(34)(41)Preference dividends
(9)7885Goodwill81,0511,132Net profit after tax & OEI
(4)(395)1,531(271)
(85)(1,906)
2H03
-(4)Outside equity interests(19)(333)Tax
101,388Net profit before tax(27)(214)Bad debts
(9)(78)Goodwill(3)(1,857)Operating expenses
% Change1H03$m
20 Full year results - 2003
Cash earnings up 10%
Increase due principally to growth in
risk adjusted assets
Cash earnings net of tax
2,0632,271
8428106
13156445
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
Sep-02 Revenue (excequip fin)
EquipmentFinance
Expenses AGC BT/RAAM &Hastings
Bad Debts Sep-03
$m
Cash return on ordinary equity 21%Strong revenue
growth, the key earnings driver
Ongoing Expenses 5% Higher
21 Full year results - 2003
Loan growth
1202.23.64.9Equipment Finance re-build
76.97.17.4Personal (loans & cards)2066.472.879.9Housing1
1973.379.987.3Consumer
% Change
141117
150133
11
Sep 02 -Sep 03
0.61.51.5BT Financial Group
Business Unit
24.525.527.2Business (excl. equip. finance)
21.522.422.2WIB18.921.221.4New Zealand Banking
Group
156.7128.7140.6
2H02
178.0142.9164.1
2H03
164.8Avg int. earning assets137.8Risk weighted assets153.7Net loans and acceptances
1H03$bn
1 Securitised loans deducted from total
22 Full year results - 2003
Margin dynamics
%
2.65
2.80
2.71
2.50
2.60
2.70
2.80
2.90
2002 AGC 2002Adjusted
Productmargindecline
Overseas Hybrids Freefunds
2003
7 bps4 bps
2 bps 5 bps
9 bps
23 Full year results - 2003
Non-interest income analysis
2,518
2,986
5449
352
204 15
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
3,000
Sep-02 AGC P'holderRec.
Ongoing BT/RAAM Hastings Sep-03
$m
11 month contribution
from BTPick-up in fees and stronger financial markets income
2H03
24 Full year results - 2003
Expense analysis
53,4523,615Adjusted operating expenses
61,2551,331Other expenses
-(148)Net impact of change in composition of business
93,4523,763Operating expenses
91,6881,836Salaries & other staff expenses
1589596Equipment & occupancy
% Change20022003$m
25 Full year results - 2003
Composition of expense growth
• 2003 expenses were impacted by the change in Westpac’s business mix. Adjusting for this change, expenses rose 4.7%
• Other specific expenses are items previously identified as having a significant impact on 2003 cost growth.
• Adjusted expense growth includes the funding of:
- Australian investments in CRM and additional staff (both permanent and casual)
- Restoration of Institutional Bank incentives
- New Zealand head office relocation and re-branding
Composition of expenses $m
4.7%Increase on 2002
3,615
1481
3,763
Adjusted expenses
Change in business composition
2003 Expenses
OutcomeExpected
3.5%2.6%% impact on 2003 expenses
906822
11977IAS1942NZD appreciation
Other specific expense items $m
1. Additional expenses associated with the change in business mix from the sale of AGC and the purchase of BT and RAAM
26 Full year results - 2003
Expense to income
49505153
30354045505560
1H02 2H02 1H03 2H03
Banking1 – expense to income%
505151505152
5456
57
30
35
40
45
50
55
60
2H99
1H00
2H00
1H01
2H01
1H02
2H02
1H03
2H03
Group - expense to income2
%
61
46
6263
3035404550556065
1H02 2H02 1H03 2H03
Wealth – expense to income%
1. Excludes AGC 2. Underlying earnings basis
27 Full year results - 2003
Expense outlook 2004
• Expense growth in 2004 expected to be lower than underlying expense growth for 2003 given:
- No further pressure from NZD/AUD exchange rate
- Decrease in temporary staff expected as project work eases
- 2004 investment program likely to be less than 2003
- Continued benefits from efficiency pipeline
12--Head Office relocation
464642
75
165
60
42
17
FY05F
26
191
74
42
17
FY06F
90Annual increment
90Cumulative total
19
21
8
FY04F
Wealth integration
Other efficiency initiatives
Lending processes
Outsourcing
$mCost efficiency pipeline
28 Full year results - 2003
Business and Consumer Banking
161,0141,178Profit on operations
(18)(272)(322)Bad debts
270 bps55.9%53.2%Expense to income
(58)
1,236
(524)
1,760
2,082
(2,365)
4,447
2003
-(58)Goodwill
151,072Cash earnings
(21)(432)Tax & OEI
171,504Operating profit
171,776Core earnings
(5)(2,250)Operating exp
104,026Operating income
% Change2002$m• Cash earnings up 15%
• Expense to income down 270bps
• Bad debt increase primarily due to dynamic provisioning for rebuild of equipment finance book
• Additional FTE to support business growth
29 Full year results - 2003
Reacquisition AGC equipment finance portfolio
• Original reacquisition targets met – one year ahead of schedule
• Cash earnings from the re-build of the equipment finance portfolio 2002 – 2003 $49.3m
• Not a contributor to risk weighted asset growth
• Remarketing agreement expires May 2004
0.0
1.0
2.0
3.0
4.0
5.0
May-02 Jun-02 Sep-02 Mar-03 Sep-03 Sep-04
Actual reacquisition of business bookInitial planned rate of reacquisition
Equipment Finance portfolio(Original balance - $5.1bn)
$bn
30 Full year results - 2003
Mortgage portfolio characteristics
• Market share of housing eased marginally on strong volumes- Owner occupied up 10%- Investment up 22%
• Funding for alterations and additions has resulted in equity access loans growing 82% from a low base
• Average LVR of new loans 63% - up from 61% in 1999
• Average LVR for mortgage insured loans 88%
• 77% of loans from customers with an existing relationship
$37 $40 $41 $43 $45
$19$21 $23
$25 $28
$10$7
$5$4
$3
0
10
20
30
40
50
60
70
80
90
2H01 1H02 2H02 1H03 2H03
$bn
Owner occupied Investment housingEquity access
Australian Mortgage Portfolio
12%
34%
54%
Proportionof total
31 Full year results - 2003
Mortgages - broker introduced loans
• 23% of outstanding mortgage portfolio is broker originated
• Brokers introduced 31% of new loans in 2003
• Average size of loan is up to 15% higher than branch originated loan
• Same underwriting standards applied to all applications, and more rigorous validation process
• Broker introduced loans have lower churn and longer average life than bank originated
32 3234
3334 34 35
36
32 3130
31 31 32 3331
0
5
10
15
20
25
30
35
Jun-0
2Aug
-02Oct-
02Dec
-02Feb
-03Apr-
03Ju
n-03
Aug-03
%
Broker introduced loans(Proportion of total by value)
32 Full year results - 2003
Housing portfolio quality
• Total bad debts less than 3 basis points
• Delinquencies at low levels• 100% mortgage insurance
where loan to value (LVR) ratio > 80%
• Investment lending for CBD property stable at 2% of housing portfolio- strict criteria remain- average LVR 59%
• Revised mortgage insurance arrangements for new business in place
Mortgage insurance structure
20%82%
Proportion of portfolio with initial LVR > 80%
Westpac Lenders Mortgage Insurance (Capital base $45m)
100%
30% - Reinsured
AA Insurer
0.1Other1.8Total
0.3Brisbane0.4Melbourne1.0Sydney
Lending for CBD property $bn
33 Full year results - 2003
Housing portfolio quality
• APRA stress testing confirmed overall industry strength• Westpac’s updated stress testing provides further validation• Increase in maximum losses previously estimated due to a lower
base in key model variables - interest rates and unemployment rate • Capacity to absorb interest rate rises strong with 73% of amortising
borrowers repaying in excess of required minimum
Scenario BScenario ABase case
113.014.3
19.12.4
0.00.0
Combined effect $mCombined effect - bps
8.13.9
7.11.4
6.10.0
Unemployment rate - % Individual effect $m
2025.5
107.5
00.0
Housing prices fall - % Individual effect $m
10.67.1
8.62.8
6.60.0
Interest rates - % paIndividual effect $m
Westpac 2003 stress testing results
34 Full year results - 2003
Institutional Bank
124
150
203
181
0
50
100
150
200
250
1H02 2H02 1H03 2H03
• Cash earnings up 40%• Net interest income up 19%
driven by higher financial markets income and high margin structured finance deals
• Financial markets incomeup 29%
• Other operating income up 14% with improved structured products contribution including $15m revenue from Hastings
• Expenses higher due to transformation project – full benefits yet to be realised
$m
Cash earnings
35 Full year results - 2003
Institutional Bank
050
100150200250300
1H02 2H02 1H03 2H03Foreign exchange Interest rate productFM other
Financial markets income$m
• Financial markets income within expected volatility bands
• Impaired assets stable, bad debts rose in 2H03 –increased provisions for a small number of corporate exposures
• Overall asset quality continues to improve- No material change to
overseas investment securities carrying value
020406080
100
1H02 2H02 1H03 2H03
WIB – bad debt charge$m
36 Full year results - 2003
New Zealand Banking
• Cash earnings up 11%1
(up 14% in A$)
• Performance improvement program delivering:- Increased focus on Auckland
market including relocation of head office
- Boosting specialist sales force numbers and productivity
• Expense to income down 60 bps1 over the year, absorbing re-branding and relocation costs
• Net loans up 14%1
Cash earnings
138
207 193 188
0
40
80
120
160
200
240
1H02 2H02 1H03 2H03
NZ$
m
21 22 23 25
0
5
10
15
20
25
30
1H02 2H02 1H03 2H03
Net loans
NZ$
m
1 NZ dollars
37 Full year results - 2003
NZ dollar impact
• Rolling 12-month focus – timing main impact
• 2004 AUD/NZD hedge rate to be 1.11 compared to current market rate of 1.15
• Hedge gain/loss recognised in non-interest income
(42m)+95mOperating revenue+42mOperating expenses
+0.7bn+1bn
+37m1
Currency impact
Loans and acceptances(29m)
Hedge impact
Risk weighted assets (NZ Retail)
Cash earnings
Impact on group financials (A$)
1 WIB NZ earnings are not hedged
38 Full year results - 2003
BT Financial Group
485869Net profit after tax
(2)
50
(12)
(104)
166
2H02
86104Cash earnings
290322Operating income
(28)(35)Goodwill
(25)(22)Tax & outside equity interests
(179)(196)Operating expenses
1H032H03$m
39 Full year results - 2003
Net retail FUM against acquisition model - BT
0
2
4
6
8
10
12
Sep 02 Dec 02 Mar-03 Jun-03 Sep-03 Dec 03 Dec 04 Dec-05
$bn Acquisition modelActual
40 Full year results - 2003
Performance turnaround: Australian equities
-2.0%
-1.6%
-1.2%
-0.8%
-0.4%
0.0%
0.4%
0.8%
1.2%
May-02
Jun-0
2Ju
l-02
Aug-02
Sep-02
Oct-02
Nov-02
Dec-02
Jan-0
3Feb
-03Mar-
03Apr-
03May
-03Ju
n-03
Jul-0
3Aug
-03Sep
-03
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
Monthly portfolio excess return (LHS) One-Year Excess Return (RHS)
Rothschild Australian Equity Sector Trust vs S&P/ASX300 Accumulation Index
Source : BT
41 Full year results - 2003
Continuing to over-achieve on synergies
51
85
116
54
0
20
40
60
80
100
120
140
2003 2004 2005
Estimated synergies2003 actual achieved
$m
BT Synergies - estimated and achieved
72
2004 locked-in run rate
42 Full year results - 2003
Asset quality - forward indicators in good shape
Housing Portfolio - 90 day delinquencies
1.04
0.64
0.150.38
0.150.230.250.26
0.0
0.5
1.0
1.5
1996 1997 1998 1999 2000 2001 2002 2003
%
1.91
1.28
0.63
1.471.53
0.51
0.0
0.5
1.0
1.5
2.0
2.5
1998 1999 2000 2001 2002 2003
Business Banking - 90 day delinquencies%
WIB - impaired assets to committed exposure%
0.51
0.14
0.530.63
0.290.37
0.25
0.34
0.00.10.20.30.40.50.60.7
1996 1997 1998 1999 2000 2001 2002 2003
1.07 1.02
1.98
0.96 1.140.9
0.630.82
0.0
0.5
1.0
1.5
2.0
2.5
1996 1997 1998 1999 2000 2001 2002 2003
Including AGCExcluding AGC
Consumer Unsecured - 90 day delinquencies %
43 Full year results - 2003
Bad debt analysis
1.7%
1,394
(271)
(95)
(176)
27
(70)
(133)
2H03
(271)(190)(214)Net bad debt expense
1,3011,1621,309General provision
493547Recovery of debts previously W/O
1.8%1.7%1.7%General provision to non-housing loans & acceptances
(10)161(136)Increase in general provision
(261)(206)(78)Bad debt charge-off
(208)(171)(142)Write-offs
(102)(70)17Net transfer to/from specific provisions
1H022H021H03$m
1. Adjusted ($133m) for provisions transferred on sale of AGC
44 Full year results - 2003
Stressed exposures remain near historic lows
Categories of stressed exposures as a % of total commitments
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
1999 2000 2001 2002 2003
AGC stressed loansWatchlist & substandard90 days past due well securedImpaired
45 Full year results - 2003
Provisioning cover
Specific provisions / impaired assets
%
20
30
40
50
60
1998 2000 2002
WBC ANZ CBA NAB
General provisions / non-housing performing loans & acceptances%
1.01.21.41.61.82.02.22.4
1998 1999 2000 2001 2002 2003WBC ANZ CBA NAB
• Specific provision for impaired assets decreased to 26%, from 41% at 1H03.
• Reduction primarily due to the partial write-off of specific provisions for a couple of large corporate exposures
46 Full year results - 2003
Tax breakdown
29.0%31.7%Effective tax rate inc gross up and excl significant items
21.7%31.7%Effective tax rate inc gross up19.4%24.7%Normalised tax rate
517721Normalised tax expense46(7)
Adjustments Policy holder tax recoveries
471728Tax expense17.7%24.9%Tax expense as a % NPBT
200212003$m
1 – September 2002 tax expense has been restated for comparative purposes, removing the tax equivalent gross up. The tax equivalent gross up represents the economic benefit the Group derives from entering into various structured financing transactions that generate income subject to either a reduced or zero rate of income tax.
47 Full year results - 2003
New target capital ranges – ACE & Tier 1
Capital ratios (quarterly)
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
Mar-0
0Ju
n-00
Sep-00
Dec-00
Mar-0
1Ju
n-01
Sep-01
Dec-01
Mar-0
2Ju
n-02
Sep-02
Dec-02
Mar-0
3Ju
n-03
Sep-03
ACE Tier 1
• New target ranges:
Tier 1 6.00 – 6.75%
ACE 4.50 – 5.00%
• Maintain AA rating
• Tier 1 further strengthened via hybrids:
- FIRsTS Dec 2002
- TPS August 2003
• Average share count expected to rise in 2004
48 Full year results - 2003
Payout ratio has been rising through time
Payout ratio1• Dividend growing at or above earnings:- Cash EPS 9%- Dividends 11%
• Payout ratio likely to increase near term
• Medium term drivers of payout ratio:- Cash earnings- Franking capacity- Organic capital requirements
• Franking balance $604m
1. Based on underlying cash earnings
%
62.3
50
55
60
65
2H99
1H00
2H00
1H01
2H01
1H02
2H02
1H03
2H03
49 Full year results - 2003
Earnings guidance
• Medium term earnings drivers, revised at July 2003 market update, are still appropriate
• No additional earnings guidance or EPS forecast to be provided for 2004 or beyond
• Westpac believes it is generally unwise to focus management on narrow range of outcomes
• The regulatory environment does not support specific guidance: - UK - LSE listing rules - US – Reg G and prospectus liability
• 2003 guidance was issued to maintain an informed market given the uncertainty generated by:- Acquisition of BT and RAAM and the sale of AGC- Significant items and accounting changes
50 Full year results - 2003
A strong, broad based, high quality result
• Strong organic performance driven by revenue growth in all banking businesses and no one-offs
• Continued tight expense management while growing investment
• Robust loan growth with minimal margin deterioration
• Credit quality high and provisioning coverage strong
• Sound capital and franking position
Outlook and summary
David Morgan Chief Executive Officer
30 October 2003
52 Full year results - 2003
Economic environment
Key economic indicators• Australia and New Zealand economic fundamentals sound momentum due to:
- Solid domestic demand- Buoyant housing- Strong business sentiment
• In year ahead activity will be boosted by an export recovery driven by the rural sector and a stronger global economy
• Interest rates in Australia expected to rise modestlyin 2004
Australia
4.2%2.5%GDP
5.9%6.0%Unemployment
World4.0%3.2%GDP
2004Year to Sept 2003
53 Full year results - 2003
Credit growth
• Credit growth expected to ease:- Housing credit growth expected
to moderate from historic highs, but remain above the long-term average
- Business credit growth to return to more normal levels as economic activity recovers
-8
-4
0
4
8
12
16
20
24
Jan-90
Jan-92
Jan-94
Jan-96
Jan-98
Jan-00
Jan-02
Jan-04
%
-8
-4
0
4
8
12
16
20
24
Housing Business Total
ForecastsAustralian Credit Growth
1214Total
87Other (mainly business)
1722Housing
Sep-04 %(f)
Sep-03 %(e)
Australian Credit Growth forecasts
Source: RBA
54 Full year results - 2003
Well positioned to maintain momentum
• Established track record- Consistent growth / return mix- Disciplined financial management / low risk profile- Superior execution
• Well advanced in improving customer experience
• Clear sustainability in earnings
• Quality management team
55 Full year results - 2003
Outlook
• All businesses are in excellent shape
• Entering the 2004 year with good earnings momentum
• Operating environment expected to be tougher but still accommodating
• Medium term earnings drivers previously provided
• Outlook for 2004 remains positive
Westpac Full Year Results 2003
David Morgan Chief Executive OfficerPhilip Chronican Chief Financial Officer
30 October 2003