westpac institutional bank€¦ · profitability through enhanced customer satisfaction and product...

Westpac Institutional Bank

31 July 2003

Philip Coffey - Group Executive

Market update - July 20032

Agenda

• Business overview

• Transformation

• Expanded capabilities and growth path


Business overview: why WIB is different

Corporate andInstitutional Banking

- Originations- Advisory- TransactionalSales

Risk Finance P&P

Ban

king

Cus

tom

ers

In ve sto rs

Specialised Capital Group

InvestorSales

Debt Capital Markets

Financial Markets

Structured Finance


Business overview: solid platform

0

100

200

300

400

500

600

1H01 2H01 1H02 2H02 1H03

Revenue Expenses NPAT

Revenue – key driver of growth

$m

Derivative Sales

8%

Trade & International

8%

SCG3%

Corporate Advisory and

Custody2%

Transactional8%

Structured Finance

15% Capital Markets8%

FX Sales16%

FM Trading16%

Financing16%

Revenue by product category - 1H03


Business overview: a question of balance

-

5.0

10.0

15.0

20.0

Sep1999

Sep2000

Sep2001

Mar2002

Sep2002

Mar2003

A$

bn

Australia & New Zealand Offshore

WIB Impaired AssetsWIB On Balance Sheet Lending

245 214

363

466583

564

0

100

200

300

400

500

600

700

FY 99 FY 00 FY 01 1H 02 FY 02 1H 030.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Impaired Assets

Ratio Imp. Assets / Loans & Acceptances.

$m %


Business overview: good, but not good enough

1 ANZ 1 WBC 1 CBA2 WBC =1 UBS 2 WBC

1 BNZ 1 ANZ 1 ANZ2 WBC 2 WBC 2 WBC

Interest Rate Derivatives *1 WBC 1 ANZ 1 Deutsche2 NAB 2 WBC 2 WBC

Note* Volume based share

Trade and International

FX*

Transactional

Bonds/Semi's/Credit Securities*Australian Lead Bank

New Zealand Lead Bank

Debt Capital Markets

Syndicated Loans

Source: Greenwich Surveys, Australia/New Zealand


Does being number 1 matter?

• Lead Bank status critical to maximise value

• Corporate & Institutional clients nominate the 1-2 banks they consider their lead bank

Why is it important?

— Accounts for over 55% (and up to 70%) of market share across core product offerings

— Access to high value transaction deals

— Cross sell opportunities (average product cross sell is 4.5 for Lead Bank versus 2.9 for Non Lead Bank)

What drives Lead Bank status?

— Relationships

— Broad range of quality products

— Customer knowledge

— Solutions and service


Transformation: we have thoroughly reviewed our business

• Review undertaken to help us achieve our vision of being the No.1 wholesale bank in Australasia

• Looked at how we operate, our processes, and how we can drive profitability through enhanced customer satisfaction and productexcellence

• Utilised own high potential team, supported by global consultants

• Found we have the critical capabilities required to deliver but there is opportunity to tighten execution in several areas and identified some key growth opportunities


Transformation: our way forward

Customersegmentation

Completed Initiatives underway Goal

Organisationalalignment

No. 1 Australasian Wholesale Bank

Riskoptimisation

Credit PortfolioManagement

Core productdevelopment

Process mappingand alignment

Expense efficiencies

New capability focus


Transformation: our way forward

Completed Initiatives underway Goal

Customersegmentation

No. 1 AustralasianWholesale Bank

Core productdevelopment

Credit PortfolioManagement

Process mappingand alignment

New capability focus

• IT enhancements

• Structured investments• Specialised funds• Energy• Equity derivatives

• Sustainable earnings & Growth

• Single product coverage

– Insto FXOrganisational

alignment

Riskoptimisation

Expense efficiencies

• Operating disciplines & value for money


Pinpointing growth opportunities

Core Product Natural Market Share

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40% WIB Product Positioning vs Market Size and Growth

WIB

Mar

ket S

hare

(Rev

enue

)

0% 5% 10% 15% 25% 30%

Capital Markets

Transaction Banking

Debt Financing

Project & Syndications

Foreign Exchange

Structured Securities

Corporate Securities

Interest Rates

Energy

Custody

Structured Investments (Institutional)

Structured Investments (Retail)Specialist Asset Management

Market Profit Pool Growth Rate

Advisory(addressable market)

Above Natural Market Share

Below Natural Market Share

Notes: Size of bubble represent market profit pool size Source: WIB analysis


Building new capabilities

• Building structure and capabilities in alternative assets

• Acquired specialist asset management capability through HastingsFunds Management

• Organised to facilitate acquisition, structuring and distribution whilst:

• Separation of responsibility to achieve corporate governance

Product Manufacturing Capability Distribution Capability

Hastings Funds Management

Quadrant

WBC Specialised Funds

Property

Public Private Partnerships

Institutions

BT - IFA’s

High Net Worth desk

Private & Priority Bank

Business Bank

WBC Planners

Coordinated deal team across WIB, creating innovative product

Retail and Institutional investors looking for wealth creation opportunities in alternative asset classes

WIB Pipeline


Getting results: Moorebank Property Trust

• Department of Defence site at Moorebank, valued at around $200m

• Sale and leaseback transaction with over 40 bidders

• WIB arranged debt and equity, Stockland Property Group was cornerstone investor

• $70m of securities distributed to retail investors

• Largest single site industrial property trust


Getting results: Westpac Office Trust

• New Westpac headquarters

• WIB structured investment including

– Initial capital guarantee

– Instalment, leveraged investments

– Yield based on WBC rental stream

• Offer closed - $ 183m in first instalments received

• Largest single site office property trust


Getting results: specialised funds

• Hastings connection and processes agreed

• First asset acquired - Electranet at circa $120 million

• Leveraged:- WIB balance sheet and customer knowledge and- Hastings asset management and investor base

• Attracting institutional and retail investors


Getting results: specialised funds pipeline

• Global Renewables Limited

• Hastings Retail Infrastructure Trust

• Short listed for the Lane Cove Tunnel

• Consortium member Mitcham - Frankston Freeway

• Various others


Distribution: what did we say last year?

8

Westpac Investor U

pdate 2002 –Phil C

offey

Tapping our large retail customer base• Leverage:

� wholesale product expertise;� retail investor relationships; and� external planners

• Expanding range of investments:� capital guaranteed offerings� warrants � property trusts� hybrid equity / mezzanine debt

7

Westpac Investor U

pdate 2002 –Phil C

offey

$0

$500

$1,000

$1,500

A$m

1999 2000 2001 2002 FYForecast

Distributing to retail investors –growth opportunity

Retail distribution – volume of products sold

Products across a variety of asset classes – 2002 FY

ForecastEquity

11%

Fixed interest

66%

Property4%

Cash19%

Leverage our wholesale product

expertise

Expand investment range for retail

investors


Distribution: how did we go ?

Hybrid Equity

15%

Cash6%Equity

11%

Property14%

Other Fixed Interest

Products54%

$0

$500

$1,000

$1,500

$2,000

1999 2000 2001 2002 To July2003

• $1.7bn products sold over the last ten months

• The number of structured products offered to retail customers increased from 14 in 2001 to 24 in 2003

• $500m worth of cross sell into other Westpac retail products

Retail distribution – volume of products sold

Products across a variety of asset classes – From 1999 to June 2003


In summary

• Solid platform and a diverse portfolio of businesses

• Critical capabilities and initiatives to achieve lead bank status

• Pinpointed opportunities for growth and delivering with new capabilities


Disclaimer

The material contained in this presentation is intended to be general background information on Westpac Banking Corporation and its activities as at 31 July 2003.

The information is supplied in summary form and is therefore not necessarily complete. Also, it is not intended that it be relied upon as advice to investors or potential investors, who should consider seeking independent professional advice depending upon their specific investment objectives, financial situation or particular needs.

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