Westpac Institutional Bank
31 July 2003
Philip Coffey - Group Executive
Market update - July 20032
Agenda
• Business overview
• Transformation
• Expanded capabilities and growth path
Market update - July 20033
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
Market update - July 20034
Business overview: solid platform
0
100
200
300
400
500
600
1H01 2H01 1H02 2H02 1H03
Revenue Expenses NPAT
Revenue – key driver of growth
$m
Derivative Sales
8%
Trade & International
8%
SCG3%
Corporate Advisory and
Custody2%
Transactional8%
Structured Finance
15% Capital Markets8%
FX Sales16%
FM Trading16%
Financing16%
Revenue by product category - 1H03
Market update - July 20035
Business overview: a question of balance
-
5.0
10.0
15.0
20.0
Sep1999
Sep2000
Sep2001
Mar2002
Sep2002
Mar2003
A$
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 %
Market update - July 20036
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
Market update - July 20037
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
Market update - July 20038
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
Market update - July 20039
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
Market update - July 200310
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
Market update - July 200311
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
Market update - July 200312
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
Market update - July 200313
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
Market update - July 200314
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
Market update - July 200315
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
Market update - July 200316
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
Market update - July 200317
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
Market update - July 200318
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
Market update - July 200319
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
Market update - July 200320
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.