For personal use only
WESTPAC GROUP
WESTPAC SUBORDINATED
NOTES II
July 2013
Westpac Banking Corporation ABN 33 007 457 141.
For personal use only
Disclaimer
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.
Westpac Subordinated Notes II | July 2013
2
For personal use only
Westpac Subordinated Notes II summary
Issuer
Offer
Westpac Subordinated
Notes II (“Notes”)
Maturity1
•
Westpac Banking Corporation ("Westpac")
•
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)
•
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
•
10 years (22 August 2023)
•
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
Early Redemption
Quotation
•
Any early Redemption is subject to APRA’s prior written approval2
•
Holders have no right to request Redemption
•
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.
Westpac Subordinated Notes II | July 2013
3
For personal use only
Westpac Subordinated Notes II summary (cont.)
Interest Rate
Interest Payment
Regulatory Capital
Treatment
•
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
•
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)
•
APRA has confirmed that Westpac Subordinated Notes II will qualify as Tier 2 Capital under APRA’s Basel III capital
adequacy standards
•
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
•
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
Non-Viability Trigger
Event
Conversion following a
Non-Viability Trigger
Event
1 This date assumes the Issue Date will be 22 August 2013.
Westpac Subordinated Notes II | July 2013
4
For personal use only
Subordination and ranking of Westpac Subordinated Notes II
•
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
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
Westpac Subordinated Notes II | July 2013
5
For personal use only
Offer summary
•
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
•
The Offer consists of:
Offer size
– 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
Who can apply
Applications
– 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 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)
Westpac Subordinated Notes II | July 2013
6
For personal use only
Comparing Westpac Subordinated Notes II
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
Yes2
No
No
No
No
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
Yes, on 8 March 2019,
subject to APRA’s prior
written approval
Yes, in certain limited
circumstances
Protection under the
Banking Act or
Financial Claims
Scheme
Term
Issuer early
redemption option
No
Yes, 5 years after issue,
Yes, 5 years after issue,
on 23 August 2017 and
on 22 August 2018 and
each interest payment date each Interest Payment Date
after that date, subject to
after that date, subject to
APRA’s prior written
APRA’s prior written
approval
approval
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.
Westpac Subordinated Notes II | July 2013
7
For personal use only
Comparing Westpac Subordinated Notes II (cont.)
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
Yes, subject to conditions
No
No
No
No
Investor's ability to
withdraw or redeem
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
No
No
No
Conversion into
Ordinary Shares on a
Non-Viability Trigger
Event
No
No
Yes
8
•
Senior to Westpac
Ordinary Shares
Subordinated to
Westpac Subordinated
Notes II
•
Subordinated to
Westpac Subordinated
Notes II
Subordinated to Senior
Creditors, such as
depositors and holders
of Westpac
Subordinated Notes
2012
Potential Conversion
to Ordinary Shares
(other than on a NonViability Trigger Event)
Westpac Subordinated Notes II | July 2013
Senior to Westpac
Ordinary Shares
Scheduled conversion on
Mandatory conversion on
8 March 2021 (subject to
26 September 2013 (subject
certain conditions) or in
to certain conditions) or in
other specific circumstances other specific circumstances
Yes
No
For personal use only
Key dates for the Offer
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.
Westpac Subordinated Notes II | July 2013
9
For personal use only
WESTPAC GROUP
Westpac Banking Corporation ABN 33 007 457 141.
Cash earnings1 ($m)
2H11
1H12
16.4
15.8
16.5
15.6
15.1
15.9
16.1
1H13
1H11
3,525
2H12
2H10
3,403
1H12
1H10
3,195
2H11
2,930
3,133
1H11
2,949
3,168
2H10
Return on equity (cash basis, %)
1H10
For personal use only
Westpac – consistent, strong financial performance
2,605
2,442
1H08
2H08
2,295
2,332
1H09
2H09
1H13
Impairment charges to average gross
loans1,2 (bps)
Net interest margin1 (cash basis, %)
2.6
2H12
NIM
80
NIM excl. Treasury and Markets
70
Common equity Tier 1 ratio3 (%)
11.4
60
2.4
2.19
7.1
50
7.3
7.4
7.7
8.2
8.7
40
2.2
30
2.0
2.06
17
20
10
0
2002
2003
2004
2005
2006
2007
2008
2009
1H10
2H10
1H11
2H11
1H12
2H12
1H13
1H13
2H12
1H12
2H11
1H11
2H10
1H10
2H09
1H09
2H08
1H08
1.8
2H10 1H11 2H11 1H12 2H12 1H13 1H13
APRA Basel III
BIII
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.
Westpac Subordinated Notes II | July 2013
11
For personal use only
Westpac’s clear strategic priorities
1
2
A strong company
Reorient to higher
growth/higher return
sectors and segments
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
A$86bn
market cap
The world’s
13th largest
bank by market
cap7
AA-/Aa2/AA-
3
Continue building deeper
customer relationships
Grow customer returns on credit RWA5
• Customer return on credit risk weighted assets
4.0%, up 8bps on 1H12
One of only 11
banks rated AAor higher by
S&P and Aa2 or
higher by
Moody's8
4
Materially simplify products and
processes
Maintain lowest expense to income ratio of peers
• Expense to income 40.6%, down 51bps on 1H12
5
One team approach
Focus on leadership, diversity and flexibility
• Employee engagement 84%, up 300bps6
Strong
franchise
>20% market
share in core
segments2,3,9
12m customers
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.
Westpac Subordinated Notes II | July 2013
12
For personal use only
Setting Westpac apart –
Domestic focus, balance sheet strength and efficiency
Leader in efficiency
Clear focus on home markets of Australia and New Zealand
1
9
Total income by geography1 (%)
15
7
8
16
Asia, Pacific, Europe
& Americas
Expense to income ratio2 (%)
4
16
44.4
45.1
Peer 1
Peer 2
43.0
40.6
New Zealand
90
89
78
68
Australia
Westpac
Peer 1
Strong asset quality
Peer 2
Peer 3
Westpac
Capital levels ahead of peers
Lowest short term funding of peers
Impairment losses on loans to average gross
loans2 (bps)
Peer 3
Short term funding to total funding including
equity2,3 (%)
Common equity Tier 1 ratio2 (APRA Basel III) (%)
8.7
24
44
21
20
Peer 1
Peer 2
8.2
8.1
8.2
Peer 1
Peer 2
Peer 3
17
27
17
Westpac
Peer 1
22
Peer 2
Peer 3
Westpac
Peer 3
Westpac
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.
Westpac Subordinated Notes II | July 2013
13
For personal use only
Strong Common equity Tier 1 ratio against global peers
Global peer comparison of Basel III pro-forma Common equity Tier 1 ratios1 (%)
15.0
14.4
14.0
13.5
13.0
11.8
12.0
11.6
11.4
10.8
11.0
10.6 10.5
10.3
10.1 10.0
10.0
9.6 9.5 9.4
9.3 9.3 9.3 9.3
9.0
Basel III minimum 7.0%
9.0 8.9 8.8
8.7 8.7 8.5
8.3 8.2 8.2 8.2
8.1 8.0
8.0
7.0
6.0
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.
Westpac Subordinated Notes II | July 2013
14
BEN
BOQ
Wells Fargo
HSBC
Bk of Nova Scotia
US Bancorp
Intesa Sanpaolo
Citigroup
ING
TD Bank
JPMorgan Chase
BKIR
Bank of America
Raiffeisen Bk
RBC
Nordea
Bk of Montreal
Morgan Stanley
Canada Imperial
NAB
DnB
ANZ
Standard Chartered
CBA
Danske Bank
Westpac
DBS
SEB
Svenska
Swedbank
5.0
For personal use only
Strong capital position, up across all measures in 1H13
•
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%)
•
Key capital ratios (%)
1H12
2H12
1H13
APRA Basel 2.5
Strong rise in capital ratios over the year
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
10.8
11.7
12.5
$300bn
$298bn
$308bn
1H12
2H12
1H13
10.3
10.6
11.4
Total regulatory capital ratio
Risk weighted assets
Common equity Tier 1 ratio (BCBS1 Basel III)
70
8.74
1 Basel Committee on Banking Supervision.
15
IRRBB RWA
Mortgage
20% LGD
floor
Concessional
thresholds
266bps
Mar-13
APRA Basel
III
Dividends
paid out
Cash
earnings
30 Sept 12
APRA Basel
III
Accrued
dividend
58bps
Equity
investments
50/50
deductions
risk weighted
RWA
changes
2
(9)
22bps
Westpac Subordinated Notes II | July 2013
8
Other
(1)
1
8.16
St.George tax
adjustments
(31)
11.40
132
(67)
RWA
movement
(51)
25
Mar-13
Basel III Fully
harmonised
114
50/50
deductions
now 100%
30 Sept 12
APRA Basel
2.5
8.38
40
69
Other
Common equity Tier 1 capital ratio (% and bps)
For personal use only
Strong funding profile supported by customer deposit growth
Westpac deposit growth funding loan growth
Funding composition by residual maturity (%)
Customer deposit growth ($bn)
SFR1
64%
SFR1
83%
SFR1
7
83%
Net loan growth ($bn)
63.2
16
10
10
Wholesale Offshore <1Yr
20
57.2
58.7
59.6
5
11
10
Wholesale Offshore >1Yr
9.8 9.5
6.6
11.9
8.3
6.7
40
2H10
1H11
2H11
1H12
2H12
1H13
7
7
Securitisation
Liquid assets ($bn)
1
Equity
5
up
123bps
58
3
Cash, government and semi-government bonds
Private securities4 and government guaranteed paper
Customer deposits
Self securitisation
2
2H12
110
111
43
45
45
25
30
38
7
2
FY08
42
36
2H12
1H13
59
44
1H13
103
Short term
outstanding debt
1H13 5
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.
Westpac Subordinated Notes II | July 2013
16
50
3
1H10
10
FY08
8.6
0
2
2
4
4.3
Wholesale Onshore >1Yr
60
12.4
8.6
10
5
21.3
70
67.6
62.5
11.2
20
69.0
27.8
Customer deposit to loans ratio (%)
30
Wholesale Onshore <1Yr
7
For personal use only
Term funding focused on flexibility and diversity
New term issuance by type1 (%)
New term issuance by original tenor1,2 (%)
4
9
15
8
8
18
9
11
17
47
48
40
33
24
20
45
27
6
12
Senior unsecured
Covered bonds
Hybrid
Subordinated debt
RMBS & ABS
1 Year
Australian covered bond issuance3
Covered Bond
27
25
11%
18
38%
37%
35%
8%
1 Year
ANZ
5 Years
>5 years
Hybrid
Senior
24
50%
Govt Guaranteed
Sub Debt
$7.3bn
remaining
maturities
23
23
19
19
FY16
FY17
25%
15
2 Years
4 Years
Issuance Maturities
17
38%
24%
11
3 Years
25
75%
24
30%
15
33
100%
18%
30
2 Years
Term debt issuance and maturity profile1,4,5 ($bn)
Remaining capacity (8% cap & OC) ($bn)
Issued ($bn)
% of
capacity utilised (%)
1%
45
0
2013 1H13
year to date5
FY12
FY12
2013 year
to date5
1H13
FY12
3 Years
CBA
15
10
4 Years
NAB
5 Years
>5 years
0%
FY11
Westpac
FY12
Year to
2H13
FY14
date5 (remaining)
FY15
>FY17
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.
Westpac Subordinated Notes II | July 2013
17
Stressed exposures as a % of TCE1 (%) and provisions ($m)
3.0
$m
4,000
3,500
90+ Investor
30+ Past Due
Loss Rates
1.0
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Dec 10
Sep-10
Jun 10
Mar-10
Dec 09
-
3,000
Sep-09
2,771 2,694
90+ First Home Buyer
90+ Low Doc
Jun 09
2,909
3.0
90+ Past Due Total
2.0
Mar-09
4.0
4.0
Sep-08
%
Watchlist & substandard (%, lhs)
90+ days past due well secured (%, lhs)
Impaired (%, lhs)
IAP ($m, rhs)
CAP (inc. Econ Overlay) ($m, rhs)
Australian mortgages delinquencies and loss rates (%)
Dec 08
For personal use only
Significant improvement in asset quality in 1H13
2,500
2.26
1.26
2.0
2.17
1.24
1.94
1H13
Change
1H13 – 1H12
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
40.2%
240bps
2,000
1.03
1,482
1,470
1,505
1.0
Asset Quality
1,500
1,000
0.40
0.60
0.35
0.35
0.58
0.56
0.0
500
0
1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13
Impairment provisions to impaired assets
1 TCE is Total Committed Exposures. 2. Prior periods restated on a pro forma Basel III basis.
Westpac Subordinated Notes II | July 2013
18
For personal use only
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
Westpac Subordinated Notes II | July 2013
19
For personal use only
Contacts
For further information on Westpac, please visit our investor
website:
For further information contact
Group Treasury
www.westpac.com.au/investorcentre
Joanne Dawson
Deputy Treasurer, Westpac Banking Corporation
+61 2 8204 2777
jdawson@westpac.com.au
Go to ‘Latest news’ to access information on
Westpac Subordinated Notes II
Guy Volpicella
Executive Director, Structured Funding and Capital
+61 2 8254 9261
gvolpicella@westpac.com.au
Investor Relations
Andrew Bowden
Head of Investor Relations
+61 2 8253 4008
andrewbowden@westpac.com.au
or email: investorrelations@westpac.com.au
Jacqueline Boddy
Senior Manager, Debt Investor Relations
+61 2 8253 3133
jboddy@westpac.com.au
Westpac Subordinated Notes II | July 2013
20
For personal use only
Reinvestment Offer – Options for Eligible SPS Holders
1
Apply to reinvest all of
your Westpac SPS
2
Apply to reinvest some of
your Westpac SPS
3
Apply to reinvest all of
your Westpac SPS and
apply for additional Notes
4
5
Sell your Westpac SPS on
market and do not
participate
Do nothing
•
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
•
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 ends 1
•
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
•
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 exdate for the Final Distribution of 12 September 2013
•
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.
Westpac Subordinated Notes II | July 2013
21
For personal use only
Key dates for the Reinvestment Offer
Key dates for the Reinvestment Offer
Reinvestment Offer Record Date for determining Eligible Westpac SPS Holders (7.00pm Sydney time)
Opening Date for the Reinvestment Offer
1 July 2013
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.
Westpac Subordinated Notes II | July 2013
22
For personal use only
Key risks of Westpac Subordinated Notes II
•
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”).
Westpac Subordinated Notes II | July 2013
23