Investor and AnalystInvestor and AnalystBriefingBriefing

David WillisGroup Executive

8 September 2000

2

Disclaimer

The material contained in the following presentation isintended to be general background information onWestpac Banking Corporation and its activities as at8 September 2000.

The information is supplied in summary form and istherefore not necessarily complete. Also, it is notintended that it be relied upon as advice to investorsor potential investors, who should consider seekingindependent professional advice depending upontheir specific investment objectives, financial situationor particular needs.

3

WIB Management TeamWIB Management Team

u Jim Tate - Customer Origination

u Phil Coffey - Financial Markets

u Sean McElduff - Corporate Finance

u Simon Narroway - e-Business

u David Makinson - Financial Control

u Bob Tomlin - Risk

4

AgendaAgenda

1.0 Introduction

2.0 Business Performance

3.0 Other

4.0 Conclusion

5

AgendaAgenda

1.0 Introduction

1.1 Our Business Defined

1.2 Our Strategy

1.3 The Environment

1.4 Competitive Positioning

6

We assist and advise in the management

of cash, funding, capital and market risk

for companies and institutions operating

or investing in Australia and New Zealand.

Our Business DefinedOur Business Defined

7

Customers: 2,800Customers: 2,800Buying Behaviour: Three customer groups

RegionalCorporates and

Institutions586

Small toMedium Sized

Enterprises860

GlobalCorporates and

Institutions1358

8

Customers: 2,800Customers: 2,800Industry Segments: 13 management teams

Asi

an B

usin

ess

Ban

ks

Con

sum

er

Ene

rgy

& U

tiliti

es

Gov

ernm

ent

Hea

lth

Indu

stria

ls

Med

ia

NB

FI’s

New

Eco

nom

y

Pro

pert

y

Res

ourc

es

Mid

Siz

ed C

orp

9

GeographyGeography

New York31 Staff

London70 Staff

Asia80 Staff

Australia776 Staff

NewZealand246 Staff

10

ProductsProducts

Advice Corporate, Resource, Property andRisk Advice

Loans, Bonds, Securitisation,Structured and Project Debt, Leasing,Loan Syndication, Equity

TransactionServices(Cash)

FinancialMarkets

Foreign Exchange (Options andDerivatives), Interest Rate DerivativeFixed Interest / Debt Securities,Commodities, Structured Hedging

Domestic and International ClearingInternational Payment & Trade Services

Needs Group Products

Capital(Debt and Equity)

11

StaffStaff

u 1,203 Staff

u Average length of service is 8.6 years

u Many from global / investment banks

u Dynamic: average age is 35

u Diversity: 60% male, 40% female

u Morale: exceeds industry norms

12

Staff: Morale ComponentsStaff: Morale Components

79

65

60

78

69

50 50

66

71

49 49

69

Wor

king

Rel

atio

nshi

ps

Com

mun

icat

ion

Per

form

ance

Wor

kP

roce

sses

WIB Global Norm Australian Norm

% fa

vour

able

res

pons

e

Annual Staff Survey

Source: International Survey Research

13

AgendaAgenda

1.0 Introduction

1.1 Our Business Defined

1.2 Our Strategy

1.3 The Environment

1.4 Competitive Positioning

14

Our Strategic DirectionOur Strategic DirectionTo be the pre-eminent wholesale bank inAustralasia by leveraging customerrelationships

u Customer relationship focus

u Full service provider to Regionals / SMEs

u ‘Top 3’ market share for core products

u Global business with regional focus

15

Our Strategic ImperativesOur Strategic Imperatives

u e-Business investment

u Distribution of product

u Extend equity and advisory services

u Strengthen relationship model

16

Global and Domestic TrendsGlobal and Domestic Trendsu Consolidation of full service global and

investment banks:• ABN Amro Lloyds (1996) & BZW (1997)• Citigroup SSB (1997) & Natwest (1998)• Merrill Lynch McIntosh (1996) & Centaurus (1997)• Macquarie Bank Bankers Trust (1999)• UBS Warburg SBC (1998)

u Levelling of the “e” playing field

u Renewed global focus on AUD

17

u Growing liquidity in debt capital markets

u Retail structuring of wholesale products

u Emergence of different distribution models

Global and Domestic TrendsGlobal and Domestic Trends

18

AgendaAgenda

1.0 Introduction

1.1 Our Business Defined

1.2 Our Strategy

1.3 The Environment

1.4 Competitive Positioning

19

Market Share: CustomerMarket Share: Customer

Source: East and Partners CorporateBanking Report, April 2000

23.1

13.7

10.1 9.8 9.8

4.6 4.2 4.2 4.4

0

5

10

15

20

25

Wes

tpac

NA

B

CB

A

AN

Z

Deu

tsch

e

Cit

iban

k

Mac

qu

arie

CS

FB

Mer

rill

Lyn

ch

% R

espo

nden

ts

20Source: East and Partners CorporateBanking Report, April 2000, Top 500

Market Share: Debt ProductMarket Share: Debt Product

Off Balance Sheet On Balance Sheet

NAB15.0%

ANZ16.2%

CBA15.6%

Citibank5.2%

Westpac19.8%

Others28.2%

NAB20.7%Deutsche

10.5%

Others29.5%

ANZ16.6%

Westpac22.6%

Off Balance Sheet

21

Financial MarketsTransaction Services

Source: East and Partners CorporateBanking Report, April 2000, Top 500

Market Share: ProductMarket Share: Product

CBA13.5%

NAB18.1%

Others25.4%

Westpac19.1%

DMG7.3%

ANZ16.6%

CBA13.1%

ANZ11.6%

NAB14.1%

Others23.6%

DMG10.4%

Westpac27.2%

22

Customer SatisfactionCustomer Satisfaction

4.54.3 4.2 4.2

4.1 4.0 4.0 4.0 4.0

3

4

5JP

Mo

rgan

Sal

om

on

Sm

ithB

arn

ey

Mer

rill

Lyn

ch

Cit

iban

k

Wes

tpac

AN

Z

Deu

tsch

e

CS

FB

War

bu

rgD

illo

nR

ead

(1 = very dissatisfied / 5 = very satisfied)

Source: East and Partners CorporateBanking Report, April 2000

23

AgendaAgenda

2.0 Business Performance

2.1 How are we Performing

2.2 Risk Management

24

54.7%

46.3% 43.8%

59.9%

51.5%

0%

30%

60%

1997 1998 1999

WIB Peer Average

Key Financial MeasuresKey Financial MeasuresExpense / Income Ratio

Excludes Goodwill, Westpac Estimates

25

269

374395

0

100

200

300

400

500

FY 97 FY 98 FY 99

14.8%

10.5%

19.5%21.5%

0%

5%

10%

15%

20%

25%

FY 97 FY 98 FY 99 HY 00

Core Earnings ROAE

Key Financial MeasuresKey Financial Measures

26

AgendaAgenda

2.0 Business Performance

2.1 How are we Performing

2.2 Risk Management

27

Managing Our RiskManaging Our Risk

u Core to sustainability and ROAE

u Three areas: Market, Operational, Credit

u Tied to capital allocation

u Market risk - Phil Coffey

28

Credit RiskCredit Risk

35

40

36

43

20

30

40

FY 97 FY 98 FY 99 HY 00

$BN

Asset Levels

29

Credit RiskCredit Risk

0%

20%

40%

60%

80%

100%

AAA, AA A BBB BB & Below

Sep 97 Sep 98 Sep 99 Mar 00

Total Committed Exposure

30

Credit RiskCredit Risk

402

314268

0

100

200

300

400

Total Westpac Institutional Bank Only

31 Mar 99 30 Sept 99 31 Mar 00

$M

Net Impaired Assets

31

Credit RiskCredit Risk

40

14

26

14

10

10

20

30

40

50

Australia NorthAmerica

Asia NewZealand

Europe Japan

$A B

N

By Country of Ultimate Risk - March 2000

32

Operational RiskOperational Risk

u Managed at the business unit level

u Quarterly Review

u Annual certification by APRA

u Independent appraisal by Group Audit

33

Operational Risk MapOperational Risk Map

1 5 20

Annual Events Frequency

High

Low

Effective Controls

Qualified Controls

Net

Sev

erit

y

Requires Improvement

34

Financial MarketsFinancial Markets

Phil Coffey

35

AgendaAgenda

3.0 Other

3.1 Financial Markets

3.2 Relationship with Westpac

3.3 e-Business

36

Overview of BusinessOverview of Businessu Successful customer focused business

concentrating on AUD & NZD Excellence

• customer survey places us number 1 in market share amongstTop 500 (Greenwich Associates Treasury Survey Report) andnumber 1 in AUD & NZD in London / New York

u Return on Equity has average 25% over thelast three years

u Offices in Aust / NZ, New York, London, Asia

u Total of 375 front office staff

37

Our CustomersOur Customers

Business Bank35%

Corporate28%

Institutional37%

Our delivery model is tailored to meet theneeds of our customers

% Revenue by Key Segment

38

Financial Markets ProductFinancial Markets Product

Growth Products12%

Long Term Interest Rates

21%

Foreign Exchange

37%

Short Term Interest Rates

30%

Our products span the full spectrum ofAUD & NZD markets

% Revenue by Product Group

39

Asia & Northern HemisphereCost Base

Straight Through Processing

Processing Asian andNorthern Hemisphereoperations in Australia hassignificantly reduced ouroffshore cost base.

Our goal is STP forourselves and ourcustomers

Operating EfficiencyOperating Efficiency

102

45

0

50

100

150

93/94 98/99

$M

Manual 57%

STP 43%

40

Market Risk ManagementMarket Risk Management

u We aim for best practice in marketrisk management

u Board delegated limitu Independent risk calculation and

monitoringu EAR risk framework using full

portfolio historical simulationu Daily stress testing

41

Market Risk ManagementMarket Risk Management

Daily Earnings at Risk

0

2

4

6

8

10

12

14

16

Apr 1999 May 1999 Jun 1999 Jul 1999 Aug 1999 Sep 1999 Oct 1999 Nov 1999 Dec 1999 Jan 2000 Feb 2000 Mar 2000

Daily Earnings at Risk Quarterly Average Daily EAR

A$m

Board Limit

12 month view ofaggregated dailyearnings at risk

42

e-Business Developmente-Business Development

u Global portals

u Regional portals

u Proprietary applications

Customer buying behaviour determinesour investment approach

43

AgendaAgenda

3.0 Other

3.1 Financial Markets

3.2 Relationship with Westpac

3.3 e-Business

44

Westpac StructureWestpac Structure

Processing and IT

Pro

du

ct Other Bank Products

Corporateand

Institutional

Cu

sto

mer

BusinessCustomers

ConsumerCustomers

WIB Product

45

A Competitive AdvantageA Competitive Advantage

u Bank product to WIB customers• Transaction Services: $82M

• Funds Management / Custody / Insurance:$10M revenue

u WIB product to bank customers• Financial Markets: $73M revenue

• Corporate Finance: $250M mezzanine debt

46

AgendaAgenda

3.0 Business Performance

3.1 Financial Markets

3.2 Relationship with Westpac

3.3 e-Business

47

IT E

nab

led

Tra

nsf

orm

atio

n

• e-enable core systems & processes• web site & Intranet.• Supply chain

• Increase business scope• Reconfigure business networks

§ New value networks§ New value propositions§ New business models

Low

High

Potential for new customersand Likelihood of alliances

Create a NewBusiness

Extend theEnterprise

EnhanceBusinessExecution

Low High

Investment StrategyInvestment Strategy

48

u Contact Management: CONNECT

u Human Resources (SAP)

u Credit Origination & Approval Process

u Intranet Upgrade

u Electronic Document Management

u Straight through processing/workflow automation

u Video mail, Team Rooms, Instant Messaging

Internal

Enhance / Extend ExamplesEnhance / Extend Examples

49

50

51

Customer

FX portals

u StateStreetu yieldbroker.comu FXallu e-Bondsu Online FXu Online Researchu Vostro Onlineu ImpExu New look internet site

Enhance / Extend ExamplesEnhance / Extend Examples

52

53

54

55

56

57

AgendaAgenda

4.0 Conclusion

4.1 Future Growth

4.2 How We Are Different

58

u Increased ‘share of wallet’ from existingcustomers

• Customer focused model• Full range of services• Leveraging franchise knowledge

u Acquisitions

• By product• By customer• By geography

GrowthGrowth

59

AgendaAgenda

4.0 Conclusion

4.1 Future Growth

4.2 How We Are Different

60

DifferencesDifferences

Superior financial performance from:

u Strength of our customer franchise

u Depth of people

u Product strength

u e-Business: strong market position

61

QuestionsQuestions