INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Dr David MorganDr David MorganManaging Director & CEOMarch 2000

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

DisclaimerDisclaimer

The material contained in the following presentation is intended to be general background information on Westpac Banking Corporation and its activities as at 6 March 2000.

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.

3

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

AgendaAgenda

• Strategic framework

• Strategic progress

• eBusiness

• Financial performance

• Outlook

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

STRATEGIC FRAMEWORKSTRATEGIC FRAMEWORK

5

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

To capture the significant value embedded in our domestic franchise by pursuing a customer

centric focus

StrategyStrategy

6

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Pursuing customerPursuing customer--focused focused strategystrategy

• Know chosen customers better than competitors and anticipate their needs

• Create solutions that meet customer needs

• Exceed customers’ expectations for the quality of service provided

• Continually lower cost to serve customers

• Focus on Australia and New Zealand and the near Pacific

7

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Imperatives for our futureImperatives for our future

• Continue to assess opportunities for future growth and new ways of doing business

• Maximise the value of our customers

• Defend and grow our domestic franchise

8

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Information and Technology

Economic and Regulatory Environments

DE

MA

ND

SID

E SU

PP

LY

SID

E

• Direct economic and regulatory impacts

• Financial deepening and sophistication

• Changing product demands

• Increasing technology penetration

• Buyer behaviour

• Emerging value propositions

• Broadening of the financial services market place

• Changing market structure

• Price and cost pressure

• Consolidation & globalisation

• Value chain unbundling

• Strategic alliances and relationships

Changing Customer Demands

Changing Nature of

Competition

Rapid change in external environmentRapid change in external environment

• Processing & storage

• Electronification

• Communication

• Systems & platforms

Capacity/cost/access:

• Technical standards

• Economic cycle & monetary policy

• Supervision & prudential regulation

• Fiscal policy & tax regime

• Consumer protection

• Industry standards

• Direct market intervention

Financial Services

Marketplace

9

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

•Customer service

•Transaction processing

•Delivery

•Product management, development & sourcing

•Risk management

•Sales & marketing

•Customer information & needs management

•Brand management

Sales &Marketing

ProductSolutions

Servicing &Processing

Customer

Market is unbundling around Market is unbundling around value chain elementsvalue chain elements

10

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Current and emerging strategic Current and emerging strategic playsplays Customer Focus

Product Focus

Man

ufac

turi

ng F

ocus R

etailing FocusAggregator

Broker

Specialist

Manufacturer

• Superior customer understanding and information management• Acts as trusted objective advisor, proactively sourcing and

integrating a broad array of best available products & services to meet customer needs

• Emphasis in product management shifts from development and design to sourcing and alliance management

• Acts as a single point of contact, acting on behalf of customers for post sale service

• Outsources non core/non customer critical operations

• Targets profitable market/customer segment niches• Specialises in a narrow range of innovative products, providing

flexibility via multiple derivations• Largely automated delivery via screening criteria• Requires different point of contact for each product (pooled

service resources)

• May outsource manufacturing and processing

• Uses search/compare engines to match customers to products• Acts as a broker, reacting to current customer needs and

sourcing ‘off the shelf’ products from multiple manufacturers• Compiles delivery information to meet manufacturers’

requirements

• Mass market focus• Standard commodity products, with ability to mass customise• Use simple criteria to automate delivery • Requires different point of contact for each product (pooled

service resources)• Leverages scale in processing

ProductSolutions

Servicing& Processing

Sales &Marketing

Major value chain focus

ProductSolutions

Servicing& Processing

Sales &Marketing

ProductSolutions

Servicing& Processing

Sales &Marketing

ProductSolutions

Servicing& Processing

Sales &Marketing

11

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Evolutionary shift in our Evolutionary shift in our strategic model strategic model

Fully Integrated Manufacturer/Distributor

• Products mainly manufactured in-house

• Relatively narrow product range and mass market orientation (limited customisation

• Individual product view of each customer fragmented across multiple contact points

• Resource intensive around in-house marketing, operations & servicing

Trusted aggregator of financial solutions

• Matching customer needs with best available offering in the market

• Broad product range aggregated across suppliers to create individual financial solutions

• Integrated customer understanding independent of contact point

• Focus on sales and service (product processing performed externally)

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

STRATEGIC PROGRESSSTRATEGIC PROGRESS

13

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Strategic growth initiativesStrategic growth initiatives

• Performance Enhancement Program combining cost reduction and revenue enhancement

• Aligned organisational structure around customer segments and the value chain

• Business customer segment initiatives• eBusiness financial solutions• Enhanced CRM capability

- leading edge data mining & market analysis technologies- behavioural segmentation

14

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

New organisational modelNew organisational model

ProductSolutions

Servicing& Processing

Sales &Marketing

Shared Services (Cost-effective, client driven services)

Corporate Core (Strategy & oversight)

• Australian Business & Personal Banking

• Institutional Banking

• WestpacTrust NZ

• Banking & Financial Services Solutions

• Technology & Operations

Request Service

15

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Performance Enhancement Program Performance Enhancement Program --balancing growth & cost initiativesbalancing growth & cost initiatives

Capital Management

CorporateCore

Technology

StrategicSourcing

CallCentres

BankingOperations

NetworkDevelopment

RegionalInfrastructure

New Zealand

Credit costs &

processes

TransTasman

General & admin. expense

reductions

FinanceRe-eng / SS

HR Re-eng /Sharedservices

estpacPerformance Enhancement

Program

IT Out-sourcing

IT Efficiencies

Operationscentres

16

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Customer value and channel migration Customer value and channel migration strategies are delivering strategies are delivering

450

500

550

600

650

700

J-99 F-99 M-99 A-99 M-99 J-99 J-99 A-99 S-99 O-99 N-99 D-99

Consumer - Priority Customers

1500

1600

1700

1800

1900

2000

2100

2200

J-99 F-99 M-99 A-99 M-99 J-99 J-99 A-99 S-99 O-99 N-99 D-99

Consumer - Low value customers

1.95

1.96

1.97

1.98

1.99

2

2.01

2.02

2.03

2.04

2.05

J-99 F-99 M-99 A-99 M-99 J-99 J-99 A-99 S-99 O-99 N-99 D-99

Consumer - Products per customer (total base)

M-99 A-99 M-99 J-99 J-99 A-99 S-99 O-99 N-99 D-99

Consumer - Value per customer

(000

s)

(000

s)

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

eBUSINESSeBeBUSINESSUSINESS

18

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

eBusinesseBusiness environmentenvironment

• Real-time, 7 by 24, frictionless economy

• No more “business as usual”

• Branding is critical

• Competitive advantage = rapid execution of new business models

• Increasing rate of technology change

19

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

• Over 50% of internet users desire online financial services

• By 2003 over 40% of mortgages will be originated online (65% of refinances / top-ups)

• Consumers want unbiased advice

• Specialised aggregators convert the most “eyeballs” into transactions

• Co-ventures and alliances to content providers are key

eBusinesseBusiness environment (Cont.)environment (Cont.)

20

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW0

200

400

600

800

1000

1200

1400

1998 1999E 2000E 2001E 2002E 2003E

b2c CAGR 68%b2b CAGR 99%

The b2b explosionThe b2b explosion

US$b

Source: Forrester Research

21

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

IT E

nab

led

Tra

nsf

orm

atio

neBusinesseBusiness strategic opportunitiesstrategic opportunities

EnhanceBusinessExecution

Extend theEnterprise

Create aNew Business

• Web site

• Intranet

• Supply chain

• Increase business scope

• Reconfigured business networks

• New - networks- value propositions- business models

Low

Low

High

High

Potential for new customersand

Likelihood of alliances

22

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

• Web / browser enabled strategic platform- Interconnect everyone and everything

• Integrated into priority customer focus around future business solutions

• Rapidly implementing cost-effective solutions and services

• Building the best path to the customer/ business partner with new business models

• Adhering to standardised technologiesand solutions

Westpac’sWestpac’s eBusinesseBusiness positioning positioning

23

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

eBusinesseBusiness -- integrated across integrated across the Westpac Groupthe Westpac Group

WestpaceBusiness

Advisory Council

eBusinessCentre of Excellence

IT Platform

New Zealand

Institutional Bank

Businessand

Personal

Strategyand

Alliances

• Run eBusinessas a business

• Integrated

• Consistent

• Optimise value

• Set charter

• Coordinate message

• Prioritise

• Define & monitor

24

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

eBusinesseBusiness progressprogress

• 190,000 online customers

• Extranets - IntroducerNet, PlannerWeb, DeskBank Intranet

• eMarket - secure payment environment with 45 merchants online

• IMPEX - online Trade Finance platform

• eBonds - bond distribution platform

• Value transfers running at over $3 billion p.a.

• Online broking introduced January 2000

• Rapid growth in Online origination

25

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

eBusinesseBusiness -- the next 12 monthsthe next 12 months

• eProcurement

• b2b trading communities

EnhanceBusinessExecution

Extend theEnterprise

Create aNew Business

• Electronic bill presentment

• Online financial centre

• Additional extranets

• Wireless Internet Access (WAP) rollout

• Real time decisioning (mortgages)

• Business online applications

• Bandwidth expansion

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

FINANCIAL PERFORMANCEFINANCIAL PERFORMANCE

27

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

• Sustained returns on economic capital well in excess of the cost of capital

• EPS growth consistently exceeding underlying growth in the economy

• Flat expense line through to FY2001 (adjusted for one-off accounting impacts)

Financial performance targetsFinancial performance targets

28

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Financial performance

1995

1996

1997

1998

1999

70.1

70.0

58.9

53.5

1995

1996

1997

1998

1999

1342

1291

1132

1015

1995

1996

1997

1998

1999

Profit* ROOE*

$1,456m 16.8%

EPS*

77.0¢ 47¢

15.5

14.6

13.9

1995

1996

1997

1998

1999

*All figures stated pre abnormals

Dividends

28

33

39

43

17.0

29

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Shareholder Value ScorecardShareholder Value Scorecard

Measure Target Progress

EPS growth Above peer avg. 9.6% - 2H99

Return on Capital At least 5% > CofC 17.2% - 2H99

TSR (rolling 3 yr) Top (1st)quartile 2nd quartile

Efficiency At least peer avg 57.1% - 2H99

Risk Profile AA- rating Maintained

Capital Tier 1 - 6.5% 7.0% - Sep 99

Loan Growth At least system avg12 mos to 12/99 = 14.3%

14.7%

30

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

1999 - a tale of two halves1999 - a tale of two halves

WestpacPeer

Average

Peer Rank

Net profit (pre abs) 6.6% 2.8% 1

Underlying profit 5.6% 0.4% 1EPS diluted (pre abs) 9.6% 2.7% 1ROOE 94bp 12bp 1Non-interest income 6.1% 3.5% 1

Operating expenses -0.8% 2.7% 1

Note 1: Peer group - WBC, CBA, ANZ & NAB (all FY 1999 results).

Growth / change (H199 to H299)

31

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

EPS growthEPS growth

2.0

4.5

8.1

0123456789

2H98-1H98 1H99-2H98 2H99-1H99

%

32

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Strong volume growthStrong volume growth

1998 1999 GrowthAustralia $bn $bn %

Housing 35.4 40.5 14.6

Credit cards 3.0 3.8 27.0

Non-housing loans 19.9 22.5 13.1

At call deposits 25.6 28.2 10.2

Funds under manag’t 20.2 23.8 17.6

33

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

45

50

55

60

65

1996 1997 1998 1999 2H99

WBC Peer Average

Expense to income*%

* Excludes goodwill

34

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Asset quality and provisions Asset quality and provisions Asset quality and provisions

0

2

4

6

8

10

1996 1997 1998 1999

WBC Peer Average

Net impaired assets to equity & general provision

%

0

50

100

150

200

250

1996 1997 1998 1999

WBC Peer average

%

Total provisions to total impaired assets

35

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Capital & risk profile Capital & risk profile

Capital Ratios

-2

2

6

10

14

1994 1995 1996 1997 1998 1999

%

Tier 1 Tier 2

A2/A+

A1/A+

1996199519941993 1997 1998 1999

Aa3/AA-

External Debt Ratings

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

OUTLOOKOUTLOOK

37

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW

Outlook Outlook

• Financial performance remains on plan

• Positive outlook for meeting financial performance targets

38

INV

ES

TOR

RO

AD

SH

OW

INV

ES

TOR

RO

AD

SH

OW