Westpac Banking : WBC 1Q22 update Slide Pack (PDF 698KB)

1Q22 Update

Financial results throughout this presentation are in Australian dollars and are based on cash earnings unless otherwise stated. Refer to page 14 for cash earnings definition. All results relating to 1Q22 are unaudited. This document should be read in conjunction with Westpac's December 2021 Pillar 3 Report, incorporating the requirements of APS330. Results principally cover and compare the 1Q22 and 2H21 quarterly average periods unless otherwise stated.

FOR THE 3 MONTHS ENDED 31 DECEMBER 2021

WESTPAC BANKING CORPORATION

ABN 33 007 457 141

Fix. Simplify. Perform.

1Q22 Summary.1

Summary

Earnings increased

• Reported profit $1,815m, up 80% on 2H21 quarter average
• Cash earnings excluding notable items2 $1,580m, up 1% on 2H21 quarter average
• • Expenses down 7%, excluding notable items
  • Net interest margin (NIM) 1.91%, down 8bps from 2H21

Capital remains strong	• CET1 capital ratio 12.2% compared to 12.3% at Sep-21
- Payment of 2021 final dividend (-50bps), higher RWA (-21bps)
	- Organic capital generation, divestments and other movements (+59bps)
	• Total provision balances $4,766m down $241m, despite increased weighting to economic downside
Credit quality improved	scenario and higher overlay of $551m
• Stressed assets to TCE 1.15%, 21bps lower than Sep-21
	• Mortgage 90+ day delinquencies - Australia 0.95% (down 12bps), New Zealand 0.30% (unchanged)

Funding and liquidity

• Deposit to loan ratio improved to 83.6% (Sep-21: 81.6%)
• Funding and liquidity metrics remain strong with LCR at 142% and NSFR at 127%
• Resumed wholesale funding issuance, raised $12bn in term markets in 1Q22

Simplification

• Simplification initiatives well progressed in 1Q22
• • Headcount3 down by over 1,100
  • Wholesale auto dealer portfolio sold
  • Announced new organisational structure to simplify head office with efficiencies expected in FY22
• Expect announcements on specialist businesses in FY22

1 All figures are for 1Q22 or at 31 December 2021 unless otherwise noted. 2 Notable items are detailed on page 4. 3 Headcount includes FTE and third-party contractors.

2 Westpac Group 1Q22 Update

Unaudited 1Q22 results includes notable items.1

Performance

	2H21 Qtr
($m)	Avg	1Q22	Change
Net interest income	4,123	4,182	1%
Non-interest income	997	929	(7%)
Expenses	(3,651)	(2,697)	(26%)
Core earnings	1,469	2,414	64%
Impairment	109	(118)	Large
(charges)/benefit
Tax and non-	(670)	(712)	6%
controlling interests
Cash earnings	908	1,584	74%
Net profit	1,008	1,815	80%

• AIEA2 of $868bn, up $43bn (or 5%), mostly liquid assets up $29bn and gross loans up $11bn3
• NIM 1.91%, down 8bps
• Non-interestincome down 7%, or $68m ($58m from businesses sold in 2H21)
• Headcount4 down by more than 1,100 since Sep-21
• Lower investment spend and third-party costs
• Core earnings excluding notable items up 10%
• Credit quality sound, stressed assets and delinquencies improving
• Remaining prudent in light of current uncertainty
• • Provision overlay up $371m
  • Increased weighting of downside economic scenario to 45% from 40%
• 1Q22 cash earnings adjustments of $231m, primarily from fair value gains on economic hedges. For further details refer to page 14

1 Performance comparison is 1Q22 compared to 2H21 quarterly average unless otherwise stated. 2H21 quarterly average may not add up due to rounding. 2 AIEA is average interest-earning assets. Comparison is against 2H21 AIEA. 3 All average balances, comparing 1Q22 with 2H21. 4 Headcount includes FTE and third-party contractors.

3 Westpac Group 1Q22 Update

Unaudited 1Q22 cash earnings excluding notable items.1

Cash earnings impact of notable items

Performance

	2H21 Qtr
($m)	Avg	1Q22	Change
Net interest income	4,094	4,182	2%
Non-interest income	925	874	(6%)
Expenses	(2,850)	(2,659)	(7%)
Core earnings	2,169	2,397	10%
Impairment	109	(118)	Large
(charges)/benefit
Tax and non-controlling	(711)	(699)	(2%)
interests
Cash earnings ex	1,567	1,580	1%
notable items

($m)	2H21 Qtr Avg	1Q22
Net interest income	28	-
Non-interest income	72	55
Expenses	(801)	(38)
Tax and non-controlling interests	41	(13)
Cash earnings impact of notable	(660)	4
items

Notable items in 1Q22 mainly reflect gains from asset sales and revaluations which offset additional litigation and remediation costs

1 2H21 quarterly average may not add up due to rounding.

4 Westpac Group 1Q22 Update

Margins and expenses.

NIM (% and bps)

Competition in mortgage and business lending, high fixed rate flows, partly offset by deposit repricing

Performance

$29bn increase in

average liquid assets• NIM ex Treasury & Markets for Dec-21 month 1.67%. Expect NIM to decline further in FY22

1.99	(1bp)	1.98	(10bps)	(6bps)	9bps	1.91
0.11		0.11
						0.20
1.88		1.87				1.71
2H21	Notable	2H21 ex	Loans, deposits	Liquidity	Treasury &	1Q22
	items	notable items	& capital		Markets

• Increased liquid assets to support reduction in CLF1 - HQLA2 build expected to be largely completed by Mar-22 (CLF $37bn at Sep-21)

Treasury & Markets impact on NIM NIM ex Treasury & Markets

Expenses ($m)

3,651	(801)	Lower headcount3 and investment spend
		2,850	(120)	(61)	(10)	2,659	38	2,697
			Down $191m or 7%

2H21	2H21	2H21	Ongoing costs	Fix	Specialist	1Q22 ex	1Q22	1Q22
qtr avg	qtr avg	qtr avg ex	&	non-recurrent	Business	notable items notable items
	notable items notable items	Investments

1 Committed liquidity facility. 2 High quality liquid assets. 3 Headcount includes FTE and third-party contractors.

5 Westpac Group 1Q22 Update

• Expenses expected to decline further through FY22 including from headcount reductions, primarily in head office
• Targeting $8bn expense base in FY24