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Transcript of WESTPAC SUBORDINATED NOTES II - Home - … Subordinated Notes II | July 2013 Westpac Subordinated...
Westpac Banking Corporation ABN 33 007 457 141.
WESTPAC GROUP WESTPAC SUBORDINATED
NOTES II July 2013
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Westpac Subordinated Notes II | July 2013
Disclaimer
2
THIS PRESENTATION IS NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR ADDRESS IN THE UNITED STATES
This presentation has been prepared and authorised by Westpac Banking Corporation (ABN 33 007 457 141, AFSL 233714) in connection with a proposed offer of Westpac Subordinated Notes II (“Offer”). The
Offer is being made under a prospectus which was lodged with the Australian Securities and Investments Commission (“ASIC”) on 10 July 2013 and a replacement prospectus, which will include the Margin and
Application Form, expected to be lodged with ASIC on or about 18 July 2013.
Deutsche Bank AG, Sydney Branch, Goldman Sachs Australia Pty Limited, Macquarie Capital (Australia) Limited, Morgan Stanley Australia Securities Limited, UBS AG, Australia Branch and Westpac Banking
Corporation (via Westpac Institutional Bank) are the Joint Lead Managers to the Offer (“Joint Lead Managers”).
The information in this presentation is an overview and does not contain all information necessary to make an investment decision in relation to Westpac Subordinated Notes II. It is intended to constitute a
summary of certain information relating to Westpac and does not purport to be a complete description of Westpac or the Offer. This presentation also includes information derived from publicly available sources
that have not been independently verified.
The information in this presentation is subject to change without notice and Westpac is not obliged to update or correct it. Certain statements contained in this presentation may constitute statements about “future
matters” for the purposes of section 728(2) of the Corporations Act 2001 (Cth). The forward-looking statements include statements regarding our intent, belief or current expectations with respect to our business
and operations, market conditions, results of operations and financial condition, including, without limitation, future loan loss provisions, indicative drivers and performance metric outcomes. All statements as to
future matters are not guaranteed to be accurate and any statements as to past performance do not represent future performance.
This presentation is not intended as an offer, invitation, solicitation or recommendation with respect to the purchase or sale of any security. Prospective investors should make their own independent evaluation of
an investment in Westpac Subordinated Notes II. If you have any questions, you should seek advice from your financial adviser or other professional adviser before deciding to invest in Westpac Subordinated
Notes II.
Nothing in this presentation constitutes investment, legal, tax, financial product or other advice. The information in this presentation does not take into account your investment objectives, financial situation or
particular needs and so you should consider its appropriateness having regard to these factors before acting upon it.
No representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information contained in this presentation. To the maximum
extent permitted by law, Westpac, the Joint Lead Managers and their related bodies corporate, affiliates and each of their respective directors, officers, employees and agents disclaim all liability and responsibility
(including without limitation any liability arising from fault or negligence on the part of Westpac, the Joint Lead Managers and their related bodies corporate, affiliates and each of their respective directors, officers,
employees and agents) for any direct or indirect loss or damage which may be suffered by any recipient through use of or reliance on anything contained in or omitted from this presentation. In making an
investment decision, investors must rely on their own examination of Westpac and the Offer including the merits and risks involved. Investors should consult with their own legal, tax, business and/or financial
advisors in connection with any acquisition of securities.
Westpac Subordinated Notes II are not deposit liabilities of Westpac, nor protected accounts for the purposes of the Banking Act or the Financial Claims Scheme and are not guaranteed or insured by any
government agency, by any member of the Westpac Group or any other person.
You should consider and read the prospectus in full before deciding whether to invest in Westpac Subordinated Notes II. A copy of the prospectus is available at www.westpac.com.au/investorcentre. Applications
for Westpac Subordinated Notes II can only be made in the relevant Application Form in or accompanying the replacement prospectus, or as otherwise described in the replacement prospectus.
The distribution of this presentation or the prospectus in jurisdictions outside of Australia may be restricted by law. Any person who comes into possession of this presentation or the prospectus should seek advice
on and observe any of these restrictions. Failure to comply with these restrictions may constitute a violation of applicable securities laws. In particular, Westpac Subordinated Notes II have not been, and will not be,
registered under the United States Securities Act of 1933, as amended, (“US Securities Act”) and may not be offered, sold, delivered or transferred within the United States or to, or for the account or benefit of, US
Persons (as defined in Regulation S under the US Securities Act).
All amounts are in Australian dollars unless otherwise indicated.
Certain financial information in this presentation is presented on a cash earnings basis. Cash earnings is a non-GAAP measure. Refer to Westpac’s Interim 2013 Results (incorporating the requirements of
Appendix 4D) for the half year ended 31 March 2013 available at www.westpac.com.au for details of the basis of preparation of cash earnings.
Capitalised terms used in this presentation but not otherwise defined have the meanings given in the prospectus.
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Westpac Subordinated Notes II | July 2013
Westpac Subordinated Notes II summary
3
Issuer • Westpac Banking Corporation ("Westpac")
Offer
• A$750 million with the ability to raise more or less
• The proceeds will be used for general business purposes
• The Offer includes a Reinvestment Offer to Eligible Westpac SPS Holders (WBCPA.ASX)
Westpac Subordinated
Notes II (“Notes”)
• Fully paid, redeemable, subordinated, unsecured debt obligations of Westpac
• Face Value of A$100 each
• Must pay Interest quarterly in arrear, at a floating rate, unless Westpac is not, or will not be, Solvent
• Must be redeemed by Westpac on the Maturity Date, unless Westpac is not, or will not be, Solvent (or unless
redeemed, converted or written-off earlier)
• Are subordinated to claims of all depositors and most other creditors of Westpac
Maturity1 • 10 years (22 August 2023)
Early Redemption
• Westpac may redeem Westpac Subordinated Notes II earlier than the Maturity Date:
– All or some on 22 August 2018 or any Interest Payment Date after that date
– All (but not some) before the Maturity Date for certain tax or regulatory reasons
• Any early Redemption is subject to APRA’s prior written approval2
• Holders have no right to request Redemption
Quotation • Westpac will apply for quotation on ASX and expect Westpac Subordinated Notes II to trade under the code WBCHB
• If ASX does not grant permission for Westpac Subordinated Notes II to be quoted, the Notes will not be issued
1 This date assumes the Issue Date will be 22 August 2013.
2 There can be no certainty that APRA would provide its approval in respect of any such Redemption.
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Westpac Subordinated Notes II | July 2013
Westpac Subordinated Notes II summary (cont.)
4
Interest Rate
• Floating Interest Rate (Interest Rate = 90 day Bank Bill Rate + Margin)
• Fixed Margin to be determined under the Bookbuild and expected to be in the range of 2.30% to 2.45% p.a.
• The 90 day Bank Bill Rate is set on the first Business Day of each Interest Period
Interest Payment
• Pay Interest quarterly in arrear, wholly in cash (gross pay)
• Interest is payable on 22 February, 22 May, 22 August and 22 November of each year, commencing on 22 November
20131
• Interest payments are not deferrable or discretionary (unless Westpac is not Solvent or would not be Solvent
immediately after payment)
• Any unpaid Interest will accumulate with compounding (unless Conversion occurs, in which case, accrued but unpaid
Interest will not be paid)
Regulatory Capital
Treatment
• APRA has confirmed that Westpac Subordinated Notes II will qualify as Tier 2 Capital under APRA’s Basel III capital
adequacy standards
Non-Viability Trigger
Event
• A Non-Viability Trigger Event will occur if APRA notifies Westpac in writing that it believes Conversion of some or all
Westpac Subordinated Notes II (or conversion or write-down of other capital instruments of the Westpac Group) or a
public sector injection of capital (or equivalent support), is necessary because, without it, Westpac would become
non-viable
Conversion following a
Non-Viability Trigger
Event
• Upon a Non-Viability Trigger Event occurring, Westpac may be required to Convert some or all of the Westpac
Subordinated Notes II into Ordinary Shares. If Conversion is not possible, the Notes will be Written-off and the rights of
Holders will be terminated
• If Westpac is required to convert only an amount of Relevant Capital Securities, Westpac will first convert or write off all
Relevant Tier 1 Capital Securities before Conversion of Westpac Subordinated Notes II
1 This date assumes the Issue Date will be 22 August 2013.
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Westpac Subordinated Notes II | July 2013
Subordination and ranking of Westpac Subordinated Notes II
5
Higher ranking Illustrative examples
Preferred and secured debt Liabilities in Australia in relation to protected accounts (generally, savings accounts and term
deposits) and other liabilities preferred by law including employee entitlements and secured creditors
Unsubordinated unsecured debt Trade and general creditors, bonds, notes and debentures (including covered bonds) and other
unsubordinated unsecured debt obligations
Lower Tier 2 Capital Securities
(issued prior to 1 January 2013)
Westpac Subordinated Notes 2012, other subordinated bonds, notes and debentures and other
subordinated unsecured debt obligations with a fixed maturity date
Tier 2 Capital Securities (issued
on or after 1 January 2013) and
Upper Tier 2 Capital Securities
(issued prior to 1 January 2013)
Westpac Subordinated Notes II, Westpac Perpetual Capital Notes
Tier 1 Capital hybrid securities Notes or preference shares in respect of TPS 2003, TPS 2004, Westpac TPS, Westpac SPS,
Westpac SPS II, Westpac CPS and Westpac Capital Notes
Ordinary shares Westpac Ordinary Shares
Lower ranking
• In a Winding-Up of Westpac, Westpac Subordinated Notes II (if they are on issue at the time) rank:
– ahead of Ordinary Shares;
– ahead of Tier 1 Capital Instruments, such as Westpac SPS and Westpac Capital Notes; and
– behind Senior Creditors and certain other securities (including Westpac Subordinated Notes 2012), as illustrated below
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Westpac Subordinated Notes II | July 2013
Offer summary
6
Offer size
• The Offer is for the issue of Westpac Subordinated Notes II at a Face Value of A$100 each to raise approximately
A$750 million (with the ability to raise more or less)
• The Offer includes a Reinvestment Offer, being a priority offer to Eligible Westpac SPS Holders
Who can apply
• The Offer consists of:
– The Reinvestment Offer – a priority offer to registered holders of Westpac SPS at 7.00pm (Sydney time) on 1 July
2013 and shown on the Register as having an address in Australia
– The Securityholder Offer – an offer to registered holders of Ordinary Shares, Westpac TPS, Westpac SPS II,
Westpac CPS, Westpac Subordinated Notes 2012 or Westpac Capital Notes at 7.00pm (Sydney time) on 1 July 2013
and shown on the Register as having an address in Australia
– The Broker Firm Offer – an offer to clients of the Syndicate Brokers
– The Institutional Offer – an offer to Institutional Investors through Westpac Institutional Bank
Applications
• Applications may be scaled back if there is excess demand
• Priority will be given to Applications received under the Reinvestment Offer when allocating the Notes
• Applications must be for a minimum of 50 Notes (A$5,000) and thereafter in multiples of 10 Notes (A$1,000) (these
requirements do not necessarily apply to Eligible Westpac SPS Holders)
• There is no general public offer of Westpac Subordinated Notes II. However, Westpac reserves the right to accept
Applications from other persons at its discretion (subject to selling restrictions) For
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Westpac Subordinated Notes II | July 2013
Comparing Westpac Subordinated Notes II
7
Westpac Term Deposit Westpac Subordinated
Notes 2012
Westpac Subordinated
Notes II Westpac Capital Notes Westpac SPS
ASX code Not quoted on ASX WBCHA WBCHB1 WBCPD WBCPA
Legal form Deposit
Note; Unsecured
subordinated debt
obligation
Note; Unsecured
subordinated debt
obligation
Note; Unsecured
subordinated debt
obligation
Stapled security; One
preference share and one
note issued by Westpac
Protection under the
Banking Act or
Financial Claims
Scheme
Yes2 No No No No
Term 1 month to 5 years
(usually) 10 years3 10 years3
Perpetual with the first
possible scheduled
conversion after 8 years4
Perpetual with the Initial
Mandatory Conversion Date
on 26 September 2013
Issuer early
redemption option No
Yes, 5 years after issue,
on 23 August 2017 and
each interest payment date
after that date, subject to
APRA’s prior written
approval
Yes, 5 years after issue,
on 22 August 2018 and
each Interest Payment Date
after that date, subject to
APRA’s prior written
approval
Yes, on 8 March 2019,
subject to APRA’s prior
written approval
Yes, in certain limited
circumstances
Interest / distribution /
dividend rate Fixed (usually) Floating Floating Floating Floating
Interest / distribution /
dividend payment Cumulative, unfranked Cumulative, unfranked Cumulative, unfranked Non-cumulative, franked Non-cumulative, franked
Interest / distribution /
dividend payment
frequency
End of term or per annum
or monthly Quarterly Quarterly Quarterly Quarterly
1 Westpac will apply to have Notes quoted on ASX and they are expected to trade under this code. 2 For deposits made from 1 February 2012, up to an amount per account holder per ADI of A$250,000.
3 Subject to possible early redemption by Westpac in certain circumstances with APRA’s prior written approval. 4 Subject to possible early redemption by Westpac (with APRA’s prior written approval), transfer or
conversion in certain circumstances.
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Westpac Subordinated Notes II | July 2013
Comparing Westpac Subordinated Notes II (cont.)
8
Westpac Term Deposit Westpac Subordinated
Notes 2012
Westpac Subordinated
Notes II Westpac Capital Notes Westpac SPS
Are Interest /
distribution / dividend
payments
discretionary?
No No, subject to a
solvency condition
No, subject to the
Solvency Condition Yes Yes
Transferable No Yes – quoted on ASX Yes – quoted on ASX Yes – quoted on ASX Yes – quoted on ASX
Investor's ability to
withdraw or redeem Yes, subject to conditions No No No No
Ranking
(in a winding up of
Westpac)
• Senior to Westpac
Subordinated Notes II
and other Equal and
Junior Ranking Capital
Instruments
• Senior to Westpac
Subordinated Notes II
• Senior to Ordinary
Shares and other Junior
Ranking Capital
Instruments, such as
Westpac Capital Notes
and Westpac SPS
• Subordinated to Senior
Creditors, such as
depositors and holders
of Westpac
Subordinated Notes
2012
• Senior to Westpac
Ordinary Shares
• Subordinated to
Westpac Subordinated
Notes II
• Senior to Westpac
Ordinary Shares
• Subordinated to
Westpac Subordinated
Notes II
Potential Conversion
to Ordinary Shares
(other than on a Non-
Viability Trigger Event)
No No No
Scheduled conversion on
8 March 2021 (subject to
certain conditions) or in
other specific circumstances
Mandatory conversion on
26 September 2013 (subject
to certain conditions) or in
other specific circumstances
Conversion into
Ordinary Shares on a
Non-Viability Trigger
Event
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Westpac Subordinated Notes II | July 2013
Key dates for the Offer
9
Key dates for the Offer
Record date for determining Eligible Securityholders (7.00pm Sydney time) 1 July 2013
Announcement of Offer and lodgement of Prospectus with ASIC 10 July 2013
Bookbuild 17 July 2013
Announcement of Margin 17 July 2013
Lodgement of replacement Prospectus with ASIC 18 July 2013
Opening Date for the Offer 18 July 2013
Closing Date for the Reinvestment Offer (5.00pm Sydney time) 9 August 2013
Closing Date for the Securityholder Offer and the Broker Firm Offer (5.00pm Sydney time) 13 August 2013
Issue Date of Notes 22 August 2013
Commencement of deferred settlement trading 23 August 2013
Holding Statements despatched by 28 August 2013
Commencement of normal settlement trading 29 August 2013
Key dates for Westpac Subordinated Notes II
Record Date for first Interest payment 14 November 2013
First Interest Payment Date1 22 November 2013
First Optional Redemption Date (at Westpac's discretion)2 22 August 2018
Maturity Date 22 August 2023
1 Interest is payable quarterly in arrear, subject to the Solvency Condition. 2 APRA must provide its prior written approval for any such Redemption. There can be no certainty that APRA will provide its approval.
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Westpac Banking Corporation ABN 33 007 457 141.
WESTPAC GROUP
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Westpac Subordinated Notes II | July 2013 11
Westpac – consistent, strong financial performance
2.19
2.06
1.8
2.0
2.2
2.4
2.6
1H
08
2H
08
1H
09
2H
09
1H
10
2H
10
1H
11
2H
11
1H
12
2H
12
1H
13
NIM
NIM excl. Treasury and Markets
Cash earnings1 ($m)
2,442 2,605
2,295 2,332
2,949 2,930 3,168 3,133 3,195
3,403 3,525
1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13
17
0
10
20
30
40
50
60
70
80
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
1H
10
2H
10
1H
11
2H
11
1H
12
2H
12
1H
13
7.1 7.3 7.4 7.7 8.2
8.7
11.4
2H10 1H11 2H11 1H12 2H12 1H13 1H13
16.4 15.8 16.5 15.6 15.1 15.9 16.1
1H
10
2H
10
1H
11
2H
11
1H
12
2H
12
1H
13
1 1H08, 2H08 and 1H09 presented on a pro-forma basis as if the St.George merger was completed on 1 October 2007 to assist comparison. 2 2002-2005 reported under AGAAP; 2006 onwards reported on A-IFRS basis. 2002-2007 does not include
St.George. 3. All numbers prior to Mar-13 on a pro forma basis.
BIII APRA Basel III
Net interest margin1 (cash basis, %) Common equity Tier 1 ratio3 (%) Impairment charges to average gross
loans1,2 (bps)
Return on equity (cash basis, %)
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Westpac Subordinated Notes II | July 2013
Westpac’s clear strategic priorities
12
A strengthened balance sheet
• Basel III fully harmonised Common equity Tier 1
ratio 11.4%
• Stable funding ratio1 83%, up 390bps on 1H12
Maintain ROE above 15%
• Cash ROE 16.1%, up 102bps on 1H12
• Above system growth in deposits2 and wealth3
• Wealth penetration sector leading at 18.6%4 up
95bps on 1H12
Grow customer returns on credit RWA5
• Customer return on credit risk weighted assets
4.0%, up 8bps on 1H12
Maintain lowest expense to income ratio of peers
• Expense to income 40.6%, down 51bps on 1H12
Focus on leadership, diversity and flexibility
• Employee engagement 84%, up 300bps6
A strong company
Reorient to higher
growth/higher return
sectors and segments
Continue building deeper
customer relationships
Materially simplify products and
processes
One team approach
1
2
3
4
5
A$86bn
market cap
The world’s
13th largest
bank by market
cap7
1 Stable funding ratio calculated as customer deposits + wholesale funding with a residual maturity greater than 12 months + equity + securitisation, as a proportion of total funding. 2 APRA Banking Statistics March 2013 3. Plan for Life December 2012 All Master Funds
Admin. 4 For Wealth penetration metrics provider details refer to slide 111 of Westpac’s Interim Results 2013 Presentation and Investor Discussion Pack available at www.westpac.com.au/investorcentre. 5 Customer return calculated as operating income, less Treasury and
Markets income, less operating expenses, divided by average credit risk weighted assets. 6. Employee engagement measured annually. Results represent FY12 compared to FY11. 7. Source: IRESS, CapitalIQ and www.xe.com based in US dollars. As at 1 July 2013 8. As at
1 July 2013 9. RBNZ March 2013.
AA-/Aa2/AA-
One of only 11
banks rated AA-
or higher by
S&P and Aa2 or
higher by
Moody's8
Strong
franchise
>20% market
share in core
segments2,3,9
12m customers For
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Westpac Subordinated Notes II | July 2013
Setting Westpac apart –
Domestic focus, balance sheet strength and efficiency
1 Source: Company Annual Reports. Westpac, Peer 1 and Peer 3 as at 30 September 2012. Peer 2 as at 30 June 2012. 2 Source: Company reports. Westpac, Peer 1 and Peer 3 as at 31 March 2013, Peer 2 as at 31 December 2012. 3 Short term
funding includes Central Bank deposits and long term wholesale funding with a residual maturity less than 1 year.
13
8.7
8.2 8.1 8.2
Westpac Peer 1 Peer 2 Peer 3
17
21 20 24
Westpac Peer 1 Peer 2 Peer 3
40.6
44.4 45.1
43.0
Westpac Peer 1 Peer 2 Peer 3
17
27 22
44
Westpac Peer 1 Peer 2 Peer 3
90
68 89
78
9
16
8
7
1
16
4
15
Westpac Peer 1 Peer 2 Peer 3
Asia, Pacific, Europe& Americas
New Zealand
Australia
Total income by geography1 (%) Expense to income ratio2 (%)
Impairment losses on loans to average gross
loans2 (bps)
Short term funding to total funding including
equity2,3 (%) Common equity Tier 1 ratio2 (APRA Basel III) (%)
Leader in efficiency
Strong asset quality Lowest short term funding of peers
Clear focus on home markets of Australia and New Zealand
Capital levels ahead of peers
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Westpac Subordinated Notes II | July 2013
14.4
13.5
11.8 11.6
11.4
10.8 10.6 10.5
10.3 10.1 10.0
9.6 9.5 9.4 9.3 9.3 9.3 9.3 9.0 8.9 8.8 8.7 8.7
8.5 8.3 8.2 8.2 8.2 8.1 8.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
14.0
15.0
Sw
ed
ba
nk
Sven
ska
SE
B
DB
S
We
stp
ac
Dan
ske B
an
k
CB
A
Sta
nd
ard
Ch
art
ere
d
AN
Z
DnB
NA
B
Can
ad
a Im
peri
al
Mo
rga
n S
tanle
y
Bk o
f M
on
tre
al
Nord
ea
RB
C
Raiffe
ise
n B
k
Ba
nk o
f A
meri
ca
BK
IR
JP
Mo
rga
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TD
Ba
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ING
Citig
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Inte
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an
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Ba
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Bk o
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ova
Sco
tia
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BC
We
lls F
arg
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BO
Q
BE
N
Basel III minimum 7.0%
Strong Common equity Tier 1 ratio against global peers
Global peer comparison of Basel III pro-forma Common equity Tier 1 ratios1 (%)
14
1. Source: Company data, Credit Suisse estimates (based on latest reporting data as at 16 April 2013). Westpac, ANZ and NAB as reported as at 31 March 2013.
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Westpac Subordinated Notes II | July 2013
Strong capital position, up across all measures in 1H13
15
• Westpac operates under APRA Basel III
regulations from 1 January 2013
• Preferred range for Common equity Tier 1
ratio of 8.0% to 8.5%, comfortably above
regulatory minimum (4.5%) and capital
conservation buffer (2.5%)
• Strong rise in capital ratios over the year
1 Basel Committee on Banking Supervision.
8.38 70 8.16
114 1 8 2 8.74
132
69 40 25 11.40
(51) (31)
(1) (9)
(67)
30
Se
pt 1
2A
PR
A B
asel
2.5
50
/50
de
du
ctio
ns
no
w 1
00
%
RW
Ach
an
ges
50
/50
de
du
ctio
ns
risk w
eig
hte
d
Equ
ity
investm
en
ts
Accru
ed
div
iden
d
30
Se
pt 1
2A
PR
A B
asel
III Ca
sh
ea
rnin
gs
Div
iden
ds
pa
id o
ut
RW
Am
ove
me
nt
St.G
eo
rge ta
xad
justm
ents
Oth
er
Mar-
13
AP
RA
Basel
III
Co
nce
ssio
nal
thre
sho
lds
Mort
ga
ge
20
% L
GD
flo
or
IRR
BB
RW
A
Oth
er
Mar-
13
Basel II
I F
ully
ha
rmon
ised
Common equity Tier 1 capital ratio (% and bps)
22bps 58bps 266bps
Key capital ratios (%) 1H12 2H12 1H13
APRA Basel 2.5 APRA Basel III
Common equity Tier 1 ratio 8.0 8.4 8.7
Additional Tier 1 capital 1.8 1.9 2.1
Tier 2 capital 1.0 1.4 1.7
Total regulatory capital ratio 10.8 11.7 12.5
Risk weighted assets $300bn $298bn $308bn
1H12 2H12 1H13
Common equity Tier 1 ratio (BCBS1 Basel III) 10.3 10.6 11.4
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Westpac Subordinated Notes II | July 2013
7 42 36
103
38
25 30
43 45
FY08 2H12 1H13 Short term outstanding debt
1H13
Cash, government and semi-government bonds
Private securities and government guaranteed paper
Self securitisation
Strong funding profile supported by customer deposit growth
16
Liquid assets ($bn)
45
2
111
5
110
Funding composition by residual maturity (%)
44
58 59
5
7 7
1
2 2
10
11 10
4
5 5 20
10 10 16
7 7
FY08 2H12 1H13
Wholesale Onshore <1Yr
Wholesale Offshore <1Yr
Wholesale Onshore >1Yr
Wholesale Offshore >1Yr
Securitisation
Equity
Customer deposits
2
SFR1 64% SFR1 83% SFR1 83%
up
123bps 4
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
Westpac deposit growth funding loan growth
4.3
8.6 8.6
21.3
9.8
27.8
11.9 11.2
3
6.6
12.4 9.5 8.3
6.7
57.2 58.7 59.6
62.5
63.2 67.6
69.0
40
50
60
70
0
10
20
30
1H10 2H10 1H11 2H11 1H12 2H12 1H13
Customer deposit growth ($bn)
Net loan growth ($bn)
Customer deposit to loans ratio (%)
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Westpac Subordinated Notes II | July 2013
FY11 FY12 Year todate
2H13 FY14 FY15 FY16 FY17 >FY17
Covered Bond Hybrid Senior Govt Guaranteed Sub Debt
Term funding focused on flexibility and diversity
17
Term debt issuance and maturity profile1,4,5 ($bn)
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. 3 Sources: Westpac, Bloomberg, Company reports as 24 June 2013 4 Maturities exclude securitisation amortisation.
Perpetual sub-debt has been included in >FY17 maturity bucket. 5 As at 21 June 2013.
Issuance Maturities
$7.3bn
remaining
maturities
23 19 19
23 24
33
25
1%
11%
24%
8%
38%
18%
1 Year 2 Years 3 Years 4 Years 5 Years >5 years
FY12 1H13
11 15
10 15
18
25
24
27
37% 38% 30%
35%
0%
25%
50%
75%
100%
0
15
30
45
ANZ CBA NAB Westpac
Remaining capacity (8% cap & OC) ($bn)
Issued ($bn)
% of capacity utilised (%)
47
33
8
4 9
Senior unsecured Covered bonds RMBS & ABS
Hybrid Subordinated debt
48
27
17
8
FY12 2013 year to date5
New term issuance by type1 (%)
Australian covered bond issuance3
FY12 1H13
9
24
12
40
15
1 Year 2 Years 3 Years 4 Years 5 Years >5 years
11
20
6
45
18
FY12 2013 year to date5
New term issuance by original tenor1,2 (%)
(remaining) 5
17
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Westpac Subordinated Notes II | July 2013
Significant improvement in asset quality in 1H13
18
Stressed exposures as a % of TCE1 (%) and provisions ($m)
1 TCE is Total Committed Exposures. 2. Prior periods restated on a pro forma Basel III basis.
0.60 0.58 0.56
0.40 0.35 0.35
1.26 1.24
1.03
1,482 1,470 1,505
2,909 2,771 2,694
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0.0
1.0
2.0
3.0
4.0
1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13
Watchlist & substandard (%, lhs)
90+ days past due well secured (%, lhs)
Impaired (%, lhs)
IAP ($m, rhs)
CAP (inc. Econ Overlay) ($m, rhs)
1.94
2.17 2.26
Australian mortgages delinquencies and loss rates (%)
-
1.0
2.0
3.0
4.0
Se
p-0
8
Dec 0
8
Ma
r-09
Jun
09
Se
p-0
9
Dec 0
9
Ma
r-10
Jun
10
Se
p-1
0
Dec 1
0
Ma
r-11
Jun
-11
Se
p-1
1
Dec-1
1
Ma
r-12
Jun
-12
Se
p-1
2
Dec-1
2
Ma
r-13
90+ Past Due Total 90+ First Home Buyer
90+ Low Doc 90+ Investor
30+ Past Due Loss Rates
1H13 Change
1H13 – 1H12
Asset Quality
Net write-offs to average loans annualised 21bps (8bps)
Total impaired assets to gross loans 82bps (6bps)
Total provisions to gross loans 80bps (6bps)
Collectively assessed provisions to CRWA 106bps (10bps)2
Impairment provisions to impaired assets 40.2% 240bps
% $m
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Westpac Subordinated Notes II | July 2013 19
Joint Lead Managers
Westpac Institutional Bank • Allan O’Sullivan (02) 8254 1425 • Robbie Moulton (02) 8253 4584
Deutsche Bank • Rupert Daly (02) 8258 1408 • Mozammel Ali (02) 8258 1845
Goldman Sachs • Michael Cluskey (03) 9679 1138 • Andrew Edwards Parton (02) 9320 1296
Macquarie • Kate Herfort (02) 8232 5956 • Andrew Batmanian (02) 8232 6501
Morgan Stanley • Bob Herbert (03) 9256 8937 • Andrew Brown (02) 9770 1509
UBS • Andrew Buchanan (02) 9324 2617 • Joe Hunt (02) 9324 3718 F
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Westpac Subordinated Notes II | July 2013 20
Contacts
Group Treasury
Joanne Dawson
Deputy Treasurer, Westpac Banking Corporation
+61 2 8204 2777
Guy Volpicella
Executive Director, Structured Funding and Capital
+61 2 8254 9261
Investor Relations
Andrew Bowden
Head of Investor Relations
+61 2 8253 4008
or email: [email protected]
Jacqueline Boddy
Senior Manager, Debt Investor Relations
+61 2 8253 3133
For further information contact For further information on Westpac, please visit our investor
website:
www.westpac.com.au/investorcentre
Go to ‘Latest news’ to access information on
Westpac Subordinated Notes II
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Westpac Subordinated Notes II | July 2013
Reinvestment Offer – Options for Eligible SPS Holders
21
1 Apply to reinvest all of
your Westpac SPS
• Eligible Westpac SPS Holders may apply to have all of their Westpac SPS held on the Reinvestment Offer Record Date
reinvested in Westpac Subordinated Notes II
• Eligible Westpac SPS Holders who choose this option will receive a Pro-Rata Distribution of $0.5293 per Westpac SPS on
29 August 20131, but will not receive a Final Distribution
2 Apply to reinvest some of
your Westpac SPS
• Eligible Westpac SPS Holders may apply to have only some of their Westpac SPS held on the Reinvestment Offer Record
Date reinvested in Westpac Subordinated Notes II
• Eligible Westpac SPS Holders who choose this option will receive a Pro-Rata Distribution of $0.5293 per Westpac SPS on
29 August 20131, but will not receive a Final Distribution in respect of their Reinvested Westpac SPS. They will receive a
Final Distribution in respect of the Non-Participating Westpac SPS that they still hold when trading in Westpac SPS ends1
3 Apply to reinvest all of
your Westpac SPS and
apply for additional Notes
• Eligible Westpac SPS Holders that apply to reinvest all of their Westpac SPS may also apply for more Westpac
Subordinated Notes II than the number of Westpac SPS they held on the Reinvestment Offer Record Date
4 Sell your Westpac SPS on
market and do not
participate
• Eligible Westpac SPS Holders may sell or dispose of their Westpac SPS on ASX at the prevailing market price, which may
be higher or lower than the price holders receive if they reinvest Westpac SPS in Westpac Subordinated Notes II through the
Reinvestment Offer (which is expected to be $100 per Westpac SPS)
• Under this option, holders may have to pay brokerage and may receive a price greater or less than the Face Value of $100
per Westpac SPS
• If holders choose this option, they will not be entitled to receive the Pro-Rata Distribution on any Westpac SPS sold before
the ex-date for the Pro-Rata Distribution of 15 August 2013, or the Final Distribution on any Westpac SPS sold before the ex-
date for the Final Distribution of 12 September 2013
5 Do nothing
• Westpac SPS Holders are not required to participate in the Reinvestment Offer and therefore can choose to do nothing
• Westpac intends that Non-Participating Westpac SPS will be transferred from holders to the Nominated Party on 26
September 2013. On that date, holders will receive $100 per Non-Participating Westpac SPS, plus the Final Distribution of
$0.3495 per Westpac SPS1. Holders will also receive a Pro-Rata Distribution of $0.5293 per Westpac SPS on 29 August
20131
1 Subject to satisfaction of the distribution payment test in the Westpac SPS terms.
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Westpac Subordinated Notes II | July 2013
Key dates for the Reinvestment Offer
22
Key dates for the Reinvestment Offer
Reinvestment Offer Record Date for determining Eligible Westpac SPS Holders (7.00pm Sydney time) 1 July 2013
Opening Date for the Reinvestment Offer 18 July 2013
Closing Date for the Reinvestment Offer (5.00pm Sydney time) 9 August 2013
Ex-Date for Pro-Rata Distribution 15 August 2013
On-Market Buy-Back Date 19 August 2013
Record date for Pro-Rata Distribution (7.00pm Sydney time) 21 August 2013
Issue Date of Notes 22 August 2013
Payment date for Pro-Rata Distribution¹ 29 August 2013
Key dates for Non-Participating Westpac SPS Holders
Ex-Date for Pro-Rata Distribution 15 August 2013
Record date for Pro-Rata Distribution (7.00pm Sydney time) 21 August 2013
Payment date for Pro-Rata Distribution (payable to all holders of Westpac SPS)1 29 August 2013
Last day of trading in Westpac SPS 11 September 2013
Ex-Date for Final Distribution 12 September 2013
Record date for Final Distribution (7.00pm Sydney time) (payable to Non-Participating Westpac SPS Holders) 18 September 2013
Payment date for Final Distribution (payable to Non-Participating Westpac SPS Holders)1 26 September 2013
Expected transfer date 26 September 2013
Initial Mandatory Conversion Date for Westpac SPS2 26 September 2013
1 Subject to satisfaction of the distribution payment test in the Westpac SPS terms. 2. Subject to satisfaction of certain conditions set out in the Westpac SPS terms.
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Westpac Subordinated Notes II | July 2013
• It is possible that the Notes may trade at a market price below their Face Value.
• Circumstances in which the market price of the Notes may decline include general financial market conditions, changes in investor perception and sentiment in
relation to Westpac, the availability of better rates of return on other securities issued by Westpac or other issuers and the occurrence of a Non-Viability Trigger
Event.
• The market for the Notes may be volatile and less liquid than the market for Ordinary Shares.
• Holders who wish to sell their Notes may be unable to do so at an acceptable price, or at all, if insufficient liquidity exists in the market for the Notes.
• There is a risk that Interest will not be paid and that the Face Value will not be repaid because all payments in respect of Notes are subject to the Solvency Condition
being satisfied. However, any unpaid Interest will accumulate with compounding (unless Conversion occurs, in which case, accrued but unpaid Interest will not be
paid).
• The Interest Rate will fluctuate (increase and/or decrease) over time with movements in the 90 day Bank Bill Rate.
• There is a risk that the Interest Rate may become less attractive compared to returns available on comparable securities or investments.
• The value of Ordinary Shares received for each Note that is Converted upon the occurrence of a Non-Viability Trigger Event may be significantly less than the Face
Value of each Note.
• If for any reason Conversion of Notes is not possible following the occurrence of a Non-Viability Trigger Event (for example, due to applicable law, order of a court or
action of any government authority), those Notes will be Written-off and all rights of Holders (including to interest payments and repayment of Face Value) in respect
of those Notes will be terminated. Your investment will lose its value and you will not receive any compensation.
• The price used to calculate the number of Ordinary Shares to be issued on Conversion may be different to the market price of Ordinary Shares at the time of
Conversion because the price used is based on the VWAP during the 5 Business days immediately preceding the Conversion Date. Also, the Conversion Number
is subject to the Maximum Conversion Number. The value of Ordinary Shares you receive may therefore be significantly less than the value of those Ordinary
Shares based on the Ordinary Share price on the Conversion Date.
• Redemption, Conversion or Write-off may occur in certain circumstances before the Maturity Date, which may be disadvantageous in light of market conditions or
your individual circumstances.
• In the unlikely event of a Winding Up, if the Notes are still on issue, they will rank ahead of Ordinary Shares, equally among themselves and with other Equal
Ranking Capital Instruments but behind Senior Creditors, including depositors and all holders of Westpac’s senior or less subordinated debt.
• If there is a shortfall of funds on a Winding-Up to pay the claims of Senior Creditors and holders of other Equal Ranking Capital Instruments, Holders will lose all or
some of their investment.
• Westpac may issue further securities which rank equally with, or ahead of, the Notes.
This is a summary of the key risks only. You should read Section 6 “Investment risks” of the Westpac Subordinated Notes II Prospectus in full before
deciding to invest (including “Investment Risks Relating to Westpac”).
23
Key risks of Westpac Subordinated Notes II
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