WESTPAC SUBORDINATED NOTES II€¦ · registered under the United States Securities Act of 1933,...

Westpac Banking Corporation ABN 33 007 457 141.

WESTPAC GROUP WESTPAC SUBORDINATED

NOTES II July 2013

Westpac Subordinated Notes II | July 2013

Disclaimer

2

THIS PRESENTATION IS NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR ADDRESS IN THE UNITED STATES

This presentation has been prepared and authorised by Westpac Banking Corporation (ABN 33 007 457 141, AFSL 233714) in connection with a proposed offer of Westpac Subordinated Notes II (“Offer”). The

Offer is being made under a prospectus which was lodged with the Australian Securities and Investments Commission (“ASIC”) on 10 July 2013 and a replacement prospectus, which will include the Margin and

Application Form, expected to be lodged with ASIC on or about 18 July 2013.

Deutsche Bank AG, Sydney Branch, Goldman Sachs Australia Pty Limited, Macquarie Capital (Australia) Limited, Morgan Stanley Australia Securities Limited, UBS AG, Australia Branch and Westpac Banking

Corporation (via Westpac Institutional Bank) are the Joint Lead Managers to the Offer (“Joint Lead Managers”).

The information in this presentation is an overview and does not contain all information necessary to make an investment decision in relation to Westpac Subordinated Notes II. It is intended to constitute a

summary of certain information relating to Westpac and does not purport to be a complete description of Westpac or the Offer. This presentation also includes information derived from publicly available sources

that have not been independently verified.

The information in this presentation is subject to change without notice and Westpac is not obliged to update or correct it. Certain statements contained in this presentation may constitute statements about “future

matters” for the purposes of section 728(2) of the Corporations Act 2001 (Cth). The forward-looking statements include statements regarding our intent, belief or current expectations with respect to our business

and operations, market conditions, results of operations and financial condition, including, without limitation, future loan loss provisions, indicative drivers and performance metric outcomes. All statements as to

future matters are not guaranteed to be accurate and any statements as to past performance do not represent future performance.

This presentation is not intended as an offer, invitation, solicitation or recommendation with respect to the purchase or sale of any security. Prospective investors should make their own independent evaluation of

an investment in Westpac Subordinated Notes II. If you have any questions, you should seek advice from your financial adviser or other professional adviser before deciding to invest in Westpac Subordinated

Notes II.

Nothing in this presentation constitutes investment, legal, tax, financial product or other advice. The information in this presentation does not take into account your investment objectives, financial situation or

particular needs and so you should consider its appropriateness having regard to these factors before acting upon it.

No representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates or opinions or other information contained in this presentation. To the maximum

extent permitted by law, Westpac, the Joint Lead Managers and their related bodies corporate, affiliates and each of their respective directors, officers, employees and agents disclaim all liability and responsibility

(including without limitation any liability arising from fault or negligence on the part of Westpac, the Joint Lead Managers and their related bodies corporate, affiliates and each of their respective directors, officers,

employees and agents) for any direct or indirect loss or damage which may be suffered by any recipient through use of or reliance on anything contained in or omitted from this presentation. In making an

investment decision, investors must rely on their own examination of Westpac and the Offer including the merits and risks involved. Investors should consult with their own legal, tax, business and/or financial

advisors in connection with any acquisition of securities.

Westpac Subordinated Notes II are not deposit liabilities of Westpac, nor protected accounts for the purposes of the Banking Act or the Financial Claims Scheme and are not guaranteed or insured by any

government agency, by any member of the Westpac Group or any other person.

You should consider and read the prospectus in full before deciding whether to invest in Westpac Subordinated Notes II. A copy of the prospectus is available at www.westpac.com.au/investorcentre. Applications

for Westpac Subordinated Notes II can only be made in the relevant Application Form in or accompanying the replacement prospectus, or as otherwise described in the replacement prospectus.

The distribution of this presentation or the prospectus in jurisdictions outside of Australia may be restricted by law. Any person who comes into possession of this presentation or the prospectus should seek advice

on and observe any of these restrictions. Failure to comply with these restrictions may constitute a violation of applicable securities laws. In particular, Westpac Subordinated Notes II have not been, and will not be,

registered under the United States Securities Act of 1933, as amended, (“US Securities Act”) and may not be offered, sold, delivered or transferred within the United States or to, or for the account or benefit of, US

Persons (as defined in Regulation S under the US Securities Act).

All amounts are in Australian dollars unless otherwise indicated.

Certain financial information in this presentation is presented on a cash earnings basis. Cash earnings is a non-GAAP measure. Refer to Westpac’s Interim 2013 Results (incorporating the requirements of

Appendix 4D) for the half year ended 31 March 2013 available at www.westpac.com.au for details of the basis of preparation of cash earnings.

Capitalised terms used in this presentation but not otherwise defined have the meanings given in the prospectus.


Westpac Subordinated Notes II summary

3

Issuer • Westpac Banking Corporation ("Westpac")

Offer

• A$750 million with the ability to raise more or less

• The proceeds will be used for general business purposes

• The Offer includes a Reinvestment Offer to Eligible Westpac SPS Holders (WBCPA.ASX)

Westpac Subordinated

Notes II (“Notes”)

• Fully paid, redeemable, subordinated, unsecured debt obligations of Westpac

• Face Value of A$100 each

• Must pay Interest quarterly in arrear, at a floating rate, unless Westpac is not, or will not be, Solvent

• Must be redeemed by Westpac on the Maturity Date, unless Westpac is not, or will not be, Solvent (or unless

redeemed, converted or written-off earlier)

• Are subordinated to claims of all depositors and most other creditors of Westpac

Maturity1 • 10 years (22 August 2023)

Early Redemption

• Westpac may redeem Westpac Subordinated Notes II earlier than the Maturity Date:

– All or some on 22 August 2018 or any Interest Payment Date after that date

– All (but not some) before the Maturity Date for certain tax or regulatory reasons

• Any early Redemption is subject to APRA’s prior written approval2

• Holders have no right to request Redemption

Quotation • Westpac will apply for quotation on ASX and expect Westpac Subordinated Notes II to trade under the code WBCHB

• If ASX does not grant permission for Westpac Subordinated Notes II to be quoted, the Notes will not be issued

1 This date assumes the Issue Date will be 22 August 2013.

2 There can be no certainty that APRA would provide its approval in respect of any such Redemption.


Westpac Subordinated Notes II summary (cont.)

4

Interest Rate

• Floating Interest Rate (Interest Rate = 90 day Bank Bill Rate + Margin)

• Fixed Margin to be determined under the Bookbuild and expected to be in the range of 2.30% to 2.45% p.a.

• The 90 day Bank Bill Rate is set on the first Business Day of each Interest Period

Interest Payment

• Pay Interest quarterly in arrear, wholly in cash (gross pay)

• Interest is payable on 22 February, 22 May, 22 August and 22 November of each year, commencing on 22 November

20131

• Interest payments are not deferrable or discretionary (unless Westpac is not Solvent or would not be Solvent

immediately after payment)

• Any unpaid Interest will accumulate with compounding (unless Conversion occurs, in which case, accrued but unpaid

Interest will not be paid)

Regulatory Capital

Treatment

• APRA has confirmed that Westpac Subordinated Notes II will qualify as Tier 2 Capital under APRA’s Basel III capital

adequacy standards

Non-Viability Trigger

Event

• A Non-Viability Trigger Event will occur if APRA notifies Westpac in writing that it believes Conversion of some or all

Westpac Subordinated Notes II (or conversion or write-down of other capital instruments of the Westpac Group) or a

public sector injection of capital (or equivalent support), is necessary because, without it, Westpac would become

non-viable

Conversion following a


Event

• Upon a Non-Viability Trigger Event occurring, Westpac may be required to Convert some or all of the Westpac

Subordinated Notes II into Ordinary Shares. If Conversion is not possible, the Notes will be Written-off and the rights of

Holders will be terminated

• If Westpac is required to convert only an amount of Relevant Capital Securities, Westpac will first convert or write off all

Relevant Tier 1 Capital Securities before Conversion of Westpac Subordinated Notes II

1 This date assumes the Issue Date will be 22 August 2013.


Subordination and ranking of Westpac Subordinated Notes II

5

Higher ranking Illustrative examples

Preferred and secured debt Liabilities in Australia in relation to protected accounts (generally, savings accounts and term

deposits) and other liabilities preferred by law including employee entitlements and secured creditors

Unsubordinated unsecured debt Trade and general creditors, bonds, notes and debentures (including covered bonds) and other

unsubordinated unsecured debt obligations

Lower Tier 2 Capital Securities

(issued prior to 1 January 2013)

Westpac Subordinated Notes 2012, other subordinated bonds, notes and debentures and other

subordinated unsecured debt obligations with a fixed maturity date

Tier 2 Capital Securities (issued

on or after 1 January 2013) and

Upper Tier 2 Capital Securities

(issued prior to 1 January 2013)

Westpac Subordinated Notes II, Westpac Perpetual Capital Notes

Tier 1 Capital hybrid securities Notes or preference shares in respect of TPS 2003, TPS 2004, Westpac TPS, Westpac SPS,

Westpac SPS II, Westpac CPS and Westpac Capital Notes

Ordinary shares Westpac Ordinary Shares

Lower ranking

• In a Winding-Up of Westpac, Westpac Subordinated Notes II (if they are on issue at the time) rank:

– ahead of Ordinary Shares;

– ahead of Tier 1 Capital Instruments, such as Westpac SPS and Westpac Capital Notes; and

– behind Senior Creditors and certain other securities (including Westpac Subordinated Notes 2012), as illustrated below


Offer summary

6

Offer size

• The Offer is for the issue of Westpac Subordinated Notes II at a Face Value of A$100 each to raise approximately

A$750 million (with the ability to raise more or less)

• The Offer includes a Reinvestment Offer, being a priority offer to Eligible Westpac SPS Holders

Who can apply

• The Offer consists of:

– The Reinvestment Offer – a priority offer to registered holders of Westpac SPS at 7.00pm (Sydney time) on 1 July

2013 and shown on the Register as having an address in Australia

– The Securityholder Offer – an offer to registered holders of Ordinary Shares, Westpac TPS, Westpac SPS II,

Westpac CPS, Westpac Subordinated Notes 2012 or Westpac Capital Notes at 7.00pm (Sydney time) on 1 July 2013

and shown on the Register as having an address in Australia

– The Broker Firm Offer – an offer to clients of the Syndicate Brokers

– The Institutional Offer – an offer to Institutional Investors through Westpac Institutional Bank

Applications

• Applications may be scaled back if there is excess demand

• Priority will be given to Applications received under the Reinvestment Offer when allocating the Notes

• Applications must be for a minimum of 50 Notes (A$5,000) and thereafter in multiples of 10 Notes (A$1,000) (these

requirements do not necessarily apply to Eligible Westpac SPS Holders)

• There is no general public offer of Westpac Subordinated Notes II. However, Westpac reserves the right to accept

Applications from other persons at its discretion (subject to selling restrictions)


Comparing Westpac Subordinated Notes II

7

Westpac Term Deposit Westpac Subordinated

Notes 2012


Notes II Westpac Capital Notes Westpac SPS

ASX code Not quoted on ASX WBCHA WBCHB1 WBCPD WBCPA

Legal form Deposit

Note; Unsecured

subordinated debt

obligation

Note; Unsecured

subordinated debt

obligation

Note; Unsecured

subordinated debt

obligation

Stapled security; One

preference share and one

note issued by Westpac

Protection under the

Banking Act or

Financial Claims

Scheme

Yes2 No No No No

Term 1 month to 5 years

(usually) 10 years3 10 years3

Perpetual with the first

possible scheduled

conversion after 8 years4

Perpetual with the Initial

Mandatory Conversion Date

on 26 September 2013

Issuer early

redemption option No

Yes, 5 years after issue,

on 23 August 2017 and

each interest payment date

after that date, subject to

APRA’s prior written

approval

Yes, 5 years after issue,

on 22 August 2018 and

each Interest Payment Date

after that date, subject to

APRA’s prior written

approval

Yes, on 8 March 2019,

subject to APRA’s prior

written approval

Yes, in certain limited

circumstances

Interest / distribution /

dividend rate Fixed (usually) Floating Floating Floating Floating


dividend payment Cumulative, unfranked Cumulative, unfranked Cumulative, unfranked Non-cumulative, franked Non-cumulative, franked


dividend payment

frequency

End of term or per annum

or monthly Quarterly Quarterly Quarterly Quarterly

1 Westpac will apply to have Notes quoted on ASX and they are expected to trade under this code. 2 For deposits made from 1 February 2012, up to an amount per account holder per ADI of A$250,000.

3 Subject to possible early redemption by Westpac in certain circumstances with APRA’s prior written approval. 4 Subject to possible early redemption by Westpac (with APRA’s prior written approval), transfer or

conversion in certain circumstances.


Comparing Westpac Subordinated Notes II (cont.)

8

Westpac Term Deposit Westpac Subordinated

Notes 2012


Notes II Westpac Capital Notes Westpac SPS

Are Interest /

distribution / dividend

payments

discretionary?

No No, subject to a

solvency condition

No, subject to the

Solvency Condition Yes Yes

Transferable No Yes – quoted on ASX Yes – quoted on ASX Yes – quoted on ASX Yes – quoted on ASX

Investor's ability to

withdraw or redeem Yes, subject to conditions No No No No

Ranking

(in a winding up of

Westpac)

• Senior to Westpac

Subordinated Notes II

and other Equal and

Junior Ranking Capital

Instruments


Subordinated Notes II

• Senior to Ordinary

Shares and other Junior

Ranking Capital

Instruments, such as

Westpac Capital Notes

and Westpac SPS

• Subordinated to Senior

Creditors, such as

depositors and holders

of Westpac

Subordinated Notes

2012


Ordinary Shares

• Subordinated to


Notes II


Ordinary Shares

• Subordinated to


Notes II

Potential Conversion

to Ordinary Shares

(other than on a Non-

Viability Trigger Event)

No No No

Scheduled conversion on

8 March 2021 (subject to

certain conditions) or in

other specific circumstances

Mandatory conversion on

26 September 2013 (subject

to certain conditions) or in

other specific circumstances

Conversion into

Ordinary Shares on a


Event

No No Yes Yes No


Key dates for the Offer

9

Key dates for the Offer

Record date for determining Eligible Securityholders (7.00pm Sydney time) 1 July 2013

Announcement of Offer and lodgement of Prospectus with ASIC 10 July 2013

Bookbuild 17 July 2013

Announcement of Margin 17 July 2013

Lodgement of replacement Prospectus with ASIC 18 July 2013

Opening Date for the Offer 18 July 2013

Closing Date for the Reinvestment Offer (5.00pm Sydney time) 9 August 2013

Closing Date for the Securityholder Offer and the Broker Firm Offer (5.00pm Sydney time) 13 August 2013

Issue Date of Notes 22 August 2013

Commencement of deferred settlement trading 23 August 2013

Holding Statements despatched by 28 August 2013

Commencement of normal settlement trading 29 August 2013

Key dates for Westpac Subordinated Notes II

Record Date for first Interest payment 14 November 2013

First Interest Payment Date1 22 November 2013

First Optional Redemption Date (at Westpac's discretion)2 22 August 2018

Maturity Date 22 August 2023

1 Interest is payable quarterly in arrear, subject to the Solvency Condition. 2 APRA must provide its prior written approval for any such Redemption. There can be no certainty that APRA will provide its approval.

Westpac Banking Corporation ABN 33 007 457 141.

WESTPAC GROUP

Westpac Subordinated Notes II | July 2013 11

Westpac – consistent, strong financial performance

2.19

2.06

1.8

2.0

2.2

2.4

2.6

1H

08

2H

08

1H

09

2H

09

1H

10

2H

10

1H

11

2H

11

1H

12

2H

12

1H

13

NIM

NIM excl. Treasury and Markets

Cash earnings1 ($m)

2,442 2,605

2,295 2,332

2,949 2,930 3,168 3,133 3,195

3,403 3,525

1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13

17

0

10

20

30

40

50

60

70

80

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

1H

10

2H

10

1H

11

2H

11

1H

12

2H

12

1H

13

7.1 7.3 7.4 7.7 8.2

8.7

11.4

2H10 1H11 2H11 1H12 2H12 1H13 1H13

16.4 15.8 16.5 15.6 15.1 15.9 16.1

1H

10

2H

10

1H

11

2H

11

1H

12

2H

12

1H

13

1 1H08, 2H08 and 1H09 presented on a pro-forma basis as if the St.George merger was completed on 1 October 2007 to assist comparison. 2 2002-2005 reported under AGAAP; 2006 onwards reported on A-IFRS basis. 2002-2007 does not include

St.George. 3. All numbers prior to Mar-13 on a pro forma basis.

BIII APRA Basel III

Net interest margin1 (cash basis, %) Common equity Tier 1 ratio3 (%) Impairment charges to average gross

loans1,2 (bps)

Return on equity (cash basis, %)


Westpac’s clear strategic priorities

12

A strengthened balance sheet

• Basel III fully harmonised Common equity Tier 1

ratio 11.4%

• Stable funding ratio1 83%, up 390bps on 1H12

Maintain ROE above 15%

• Cash ROE 16.1%, up 102bps on 1H12

• Above system growth in deposits2 and wealth3

• Wealth penetration sector leading at 18.6%4 up

95bps on 1H12

Grow customer returns on credit RWA5

• Customer return on credit risk weighted assets

4.0%, up 8bps on 1H12

Maintain lowest expense to income ratio of peers

• Expense to income 40.6%, down 51bps on 1H12

Focus on leadership, diversity and flexibility

• Employee engagement 84%, up 300bps6

A strong company

Reorient to higher

growth/higher return

sectors and segments

Continue building deeper

customer relationships

Materially simplify products and

processes

One team approach

1

2

3

4

5

A$86bn

market cap

The world’s

13th largest

bank by market

cap7

1 Stable funding ratio calculated as customer deposits + wholesale funding with a residual maturity greater than 12 months + equity + securitisation, as a proportion of total funding. 2 APRA Banking Statistics March 2013 3. Plan for Life December 2012 All Master Funds

Admin. 4 For Wealth penetration metrics provider details refer to slide 111 of Westpac’s Interim Results 2013 Presentation and Investor Discussion Pack available at www.westpac.com.au/investorcentre. 5 Customer return calculated as operating income, less Treasury and

Markets income, less operating expenses, divided by average credit risk weighted assets. 6. Employee engagement measured annually. Results represent FY12 compared to FY11. 7. Source: IRESS, CapitalIQ and www.xe.com based in US dollars. As at 1 July 2013 8. As at

1 July 2013 9. RBNZ March 2013.

AA-/Aa2/AA-

One of only 11

banks rated AA-

or higher by

S&P and Aa2 or

higher by

Moody's8

Strong

franchise

>20% market

share in core

segments2,3,9

12m customers


Setting Westpac apart –

Domestic focus, balance sheet strength and efficiency

1 Source: Company Annual Reports. Westpac, Peer 1 and Peer 3 as at 30 September 2012. Peer 2 as at 30 June 2012. 2 Source: Company reports. Westpac, Peer 1 and Peer 3 as at 31 March 2013, Peer 2 as at 31 December 2012. 3 Short term

funding includes Central Bank deposits and long term wholesale funding with a residual maturity less than 1 year.

13

8.7

8.2 8.1 8.2

Westpac Peer 1 Peer 2 Peer 3

17

21 20 24


40.6

44.4 45.1

43.0


17

27 22

44


90

68 89

78

9

16

8

7

1

16

4

15


Asia, Pacific, Europe& Americas

New Zealand

Australia

Total income by geography1 (%) Expense to income ratio2 (%)

Impairment losses on loans to average gross

loans2 (bps)

Short term funding to total funding including

equity2,3 (%) Common equity Tier 1 ratio2 (APRA Basel III) (%)

Leader in efficiency

Strong asset quality Lowest short term funding of peers

Clear focus on home markets of Australia and New Zealand

Capital levels ahead of peers


14.4

13.5

11.8 11.6

11.4

10.8 10.6 10.5

10.3 10.1 10.0

9.6 9.5 9.4 9.3 9.3 9.3 9.3 9.0 8.9 8.8 8.7 8.7

8.5 8.3 8.2 8.2 8.2 8.1 8.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

13.0

14.0

15.0

Sw

ed

ba

nk

Sven

ska

SE

B

DB

S

We

stp

ac

Dan

ske B

an

k

CB

A

Sta

nd

ard

Ch

art

ere

d

AN

Z

DnB

NA

B

Can

ad

a Im

peri

al

Mo

rga

n S

tanle

y

Bk o

f M

on

tre

al

Nord

ea

RB

C

Raiffe

ise

n B

k

Ba

nk o

f A

meri

ca

BK

IR

JP

Mo

rga

n C

hase

TD

Ba

nk

ING

Citig

roup

Inte

sa S

an

pa

olo

US

Ba

nco

rp

Bk o

f N

ova

Sco

tia

HS

BC

We

lls F

arg

o

BO

Q

BE

N

Basel III minimum 7.0%

Strong Common equity Tier 1 ratio against global peers

Global peer comparison of Basel III pro-forma Common equity Tier 1 ratios1 (%)

14

1. Source: Company data, Credit Suisse estimates (based on latest reporting data as at 16 April 2013). Westpac, ANZ and NAB as reported as at 31 March 2013.


Strong capital position, up across all measures in 1H13

15

• Westpac operates under APRA Basel III

regulations from 1 January 2013

• Preferred range for Common equity Tier 1

ratio of 8.0% to 8.5%, comfortably above

regulatory minimum (4.5%) and capital

conservation buffer (2.5%)

• Strong rise in capital ratios over the year

1 Basel Committee on Banking Supervision.

8.38 70 8.16

114 1 8 2 8.74

132

69 40 25 11.40

(51) (31)

(1) (9)

(67)

30

Se

pt 1

2A

PR

A B

asel

2.5

50

/50

de

du

ctio

ns

no

w 1

00

%

RW

Ach

an

ges

50

/50

de

du

ctio

ns

risk w

eig

hte

d

Equ

ity

investm

en

ts

Accru

ed

div

iden

d

30

Se

pt 1

2A

PR

A B

asel

III Ca

sh

ea

rnin

gs

Div

iden

ds

pa

id o

ut

RW

Am

ove

me

nt

St.G

eo

rge ta

xad

justm

ents

Oth

er

Mar-

13

AP

RA

Basel

III

Co

nce

ssio

nal

thre

sho

lds

Mort

ga

ge

20

% L

GD

flo

or

IRR

BB

RW

A

Oth

er

Mar-

13

Basel II

I F

ully

ha

rmon

ised

Common equity Tier 1 capital ratio (% and bps)

22bps 58bps 266bps

Key capital ratios (%) 1H12 2H12 1H13

APRA Basel 2.5 APRA Basel III

Common equity Tier 1 ratio 8.0 8.4 8.7

Additional Tier 1 capital 1.8 1.9 2.1

Tier 2 capital 1.0 1.4 1.7

Total regulatory capital ratio 10.8 11.7 12.5

Risk weighted assets $300bn $298bn $308bn

1H12 2H12 1H13

Common equity Tier 1 ratio (BCBS1 Basel III) 10.3 10.6 11.4


7 42 36

103

38

25 30

43 45

FY08 2H12 1H13 Short term outstanding debt

1H13

Cash, government and semi-government bonds

Private securities and government guaranteed paper

Self securitisation

Strong funding profile supported by customer deposit growth

16

Liquid assets ($bn)

45

2

111

5

110

Funding composition by residual maturity (%)

44

58 59

5

7 7

1

2 2

10

11 10

4

5 5 20

10 10 16

7 7

FY08 2H12 1H13

Wholesale Onshore <1Yr

Wholesale Offshore <1Yr

Wholesale Onshore >1Yr

Wholesale Offshore >1Yr

Securitisation

Equity

Customer deposits

2

SFR1 64% SFR1 83% SFR1 83%

up

123bps 4

1 SFR is the stable funding ratio calculated on the basis of customer deposits + wholesale funding with residual maturity greater than 12 months + equity + securitisation, as a proportion of total funding. 2 2008 does not include St.George. 3. Equity excludes FX translation, Available for Sale Securities and Cash Flow Hedging Reserves. 4 Private securities include Bank paper, RMBS, and Supra-nationals. 5 Includes long term wholesale funding with a residual maturity less than 1 year.

3

Westpac deposit growth funding loan growth

4.3

8.6 8.6

21.3

9.8

27.8

11.9 11.2

3

6.6

12.4 9.5 8.3

6.7

57.2 58.7 59.6

62.5

63.2 67.6

69.0

40

50

60

70

0

10

20

30

1H10 2H10 1H11 2H11 1H12 2H12 1H13

Customer deposit growth ($bn)

Net loan growth ($bn)

Customer deposit to loans ratio (%)


FY11 FY12 Year todate

2H13 FY14 FY15 FY16 FY17 >FY17

Covered Bond Hybrid Senior Govt Guaranteed Sub Debt

Term funding focused on flexibility and diversity

17

Term debt issuance and maturity profile1,4,5 ($bn)

1 Based on residual maturity and FX spot currency translation. Includes all debt issuance with contractual maturity greater than 13 months, excluding US Commercial Paper. Contractual maturity date for hybrids and callable subordinated

instruments is the first scheduled conversion date or call date for the purposes of this disclosure. 2 Excludes securitisation. 3 Sources: Westpac, Bloomberg, Company reports as 24 June 2013 4 Maturities exclude securitisation amortisation.

Perpetual sub-debt has been included in >FY17 maturity bucket. 5 As at 21 June 2013.

Issuance Maturities

$7.3bn

remaining

maturities

23 19 19

23 24

33

25

1%

11%

24%

8%

38%

18%

1 Year 2 Years 3 Years 4 Years 5 Years >5 years

FY12 1H13

11 15

10 15

18

25

24

27

37% 38% 30%

35%

0%

25%

50%

75%

100%

0

15

30

45

ANZ CBA NAB Westpac

Remaining capacity (8% cap & OC) ($bn)

Issued ($bn)

% of capacity utilised (%)

47

33

8

4 9

Senior unsecured Covered bonds RMBS & ABS

Hybrid Subordinated debt

48

27

17

8

FY12 2013 year to date5

New term issuance by type1 (%)

Australian covered bond issuance3

FY12 1H13

9

24

12

40

15

1 Year 2 Years 3 Years 4 Years 5 Years >5 years

11

20

6

45

18

FY12 2013 year to date5

New term issuance by original tenor1,2 (%)

(remaining) 5

17


Significant improvement in asset quality in 1H13

18

Stressed exposures as a % of TCE1 (%) and provisions ($m)

1 TCE is Total Committed Exposures. 2. Prior periods restated on a pro forma Basel III basis.

0.60 0.58 0.56

0.40 0.35 0.35

1.26 1.24

1.03

1,482 1,470 1,505

2,909 2,771 2,694

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

0.0

1.0

2.0

3.0

4.0

1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13

Watchlist & substandard (%, lhs)

90+ days past due well secured (%, lhs)

Impaired (%, lhs)

IAP ($m, rhs)

CAP (inc. Econ Overlay) ($m, rhs)

1.94

2.17 2.26

Australian mortgages delinquencies and loss rates (%)

-

1.0

2.0

3.0

4.0

Se

p-0

8

Dec 0

8

Ma

r-09

Jun

09

Se

p-0

9

Dec 0

9

Ma

r-10

Jun

10

Se

p-1

0

Dec 1

0

Ma

r-11

Jun

-11

Se

p-1

1

Dec-1

1

Ma

r-12

Jun

-12

Se

p-1

2

Dec-1

2

Ma

r-13

90+ Past Due Total 90+ First Home Buyer

90+ Low Doc 90+ Investor

30+ Past Due Loss Rates

1H13 Change

1H13 – 1H12

Asset Quality

Net write-offs to average loans annualised 21bps (8bps)

Total impaired assets to gross loans 82bps (6bps)

Total provisions to gross loans 80bps (6bps)

Collectively assessed provisions to CRWA 106bps (10bps)2

Impairment provisions to impaired assets 40.2% 240bps

% $m


Joint Lead Managers

Westpac Institutional Bank • Allan O’Sullivan (02) 8254 1425 • Robbie Moulton (02) 8253 4584

Deutsche Bank • Rupert Daly (02) 8258 1408 • Mozammel Ali (02) 8258 1845

Goldman Sachs • Michael Cluskey (03) 9679 1138 • Andrew Edwards Parton (02) 9320 1296

Macquarie • Kate Herfort (02) 8232 5956 • Andrew Batmanian (02) 8232 6501

Morgan Stanley • Bob Herbert (03) 9256 8937 • Andrew Brown (02) 9770 1509

UBS • Andrew Buchanan (02) 9324 2617 • Joe Hunt (02) 9324 3718


Contacts

Group Treasury

Joanne Dawson

Deputy Treasurer, Westpac Banking Corporation

+61 2 8204 2777

[email protected]

Guy Volpicella

Executive Director, Structured Funding and Capital

+61 2 8254 9261

[email protected]

Investor Relations

Andrew Bowden

Head of Investor Relations

+61 2 8253 4008

[email protected]

or email: [email protected]

Jacqueline Boddy

Senior Manager, Debt Investor Relations

+61 2 8253 3133

[email protected]

For further information contact For further information on Westpac, please visit our investor

website:

www.westpac.com.au/investorcentre

Go to ‘Latest news’ to access information on

Westpac Subordinated Notes II

http://www.westpac.com.au/investorcentre


Reinvestment Offer – Options for Eligible SPS Holders

21

1 Apply to reinvest all of

your Westpac SPS

• Eligible Westpac SPS Holders may apply to have all of their Westpac SPS held on the Reinvestment Offer Record Date

reinvested in Westpac Subordinated Notes II

• Eligible Westpac SPS Holders who choose this option will receive a Pro-Rata Distribution of $0.5293 per Westpac SPS on

29 August 20131, but will not receive a Final Distribution

2 Apply to reinvest some of

your Westpac SPS

• Eligible Westpac SPS Holders may apply to have only some of their Westpac SPS held on the Reinvestment Offer Record

Date reinvested in Westpac Subordinated Notes II

• Eligible Westpac SPS Holders who choose this option will receive a Pro-Rata Distribution of $0.5293 per Westpac SPS on

29 August 20131, but will not receive a Final Distribution in respect of their Reinvested Westpac SPS. They will receive a

Final Distribution in respect of the Non-Participating Westpac SPS that they still hold when trading in Westpac SPS ends1

3 Apply to reinvest all of

your Westpac SPS and

apply for additional Notes

• Eligible Westpac SPS Holders that apply to reinvest all of their Westpac SPS may also apply for more Westpac

Subordinated Notes II than the number of Westpac SPS they held on the Reinvestment Offer Record Date

4 Sell your Westpac SPS on

market and do not

participate

• Eligible Westpac SPS Holders may sell or dispose of their Westpac SPS on ASX at the prevailing market price, which may

be higher or lower than the price holders receive if they reinvest Westpac SPS in Westpac Subordinated Notes II through the

Reinvestment Offer (which is expected to be $100 per Westpac SPS)

• Under this option, holders may have to pay brokerage and may receive a price greater or less than the Face Value of $100

per Westpac SPS

• If holders choose this option, they will not be entitled to receive the Pro-Rata Distribution on any Westpac SPS sold before

the ex-date for the Pro-Rata Distribution of 15 August 2013, or the Final Distribution on any Westpac SPS sold before the ex-

date for the Final Distribution of 12 September 2013

5 Do nothing

• Westpac SPS Holders are not required to participate in the Reinvestment Offer and therefore can choose to do nothing

• Westpac intends that Non-Participating Westpac SPS will be transferred from holders to the Nominated Party on 26

September 2013. On that date, holders will receive $100 per Non-Participating Westpac SPS, plus the Final Distribution of

$0.3495 per Westpac SPS1. Holders will also receive a Pro-Rata Distribution of $0.5293 per Westpac SPS on 29 August

20131

1 Subject to satisfaction of the distribution payment test in the Westpac SPS terms.


Key dates for the Reinvestment Offer

22

Key dates for the Reinvestment Offer

Reinvestment Offer Record Date for determining Eligible Westpac SPS Holders (7.00pm Sydney time) 1 July 2013

Opening Date for the Reinvestment Offer 18 July 2013

Closing Date for the Reinvestment Offer (5.00pm Sydney time) 9 August 2013

Ex-Date for Pro-Rata Distribution 15 August 2013

On-Market Buy-Back Date 19 August 2013

Record date for Pro-Rata Distribution (7.00pm Sydney time) 21 August 2013

Issue Date of Notes 22 August 2013

Payment date for Pro-Rata Distribution¹ 29 August 2013

Key dates for Non-Participating Westpac SPS Holders

Ex-Date for Pro-Rata Distribution 15 August 2013

Record date for Pro-Rata Distribution (7.00pm Sydney time) 21 August 2013

Payment date for Pro-Rata Distribution (payable to all holders of Westpac SPS)1 29 August 2013

Last day of trading in Westpac SPS 11 September 2013

Ex-Date for Final Distribution 12 September 2013

Record date for Final Distribution (7.00pm Sydney time) (payable to Non-Participating Westpac SPS Holders) 18 September 2013

Payment date for Final Distribution (payable to Non-Participating Westpac SPS Holders)1 26 September 2013

Expected transfer date 26 September 2013

Initial Mandatory Conversion Date for Westpac SPS2 26 September 2013

1 Subject to satisfaction of the distribution payment test in the Westpac SPS terms. 2. Subject to satisfaction of certain conditions set out in the Westpac SPS terms.


• It is possible that the Notes may trade at a market price below their Face Value.

• Circumstances in which the market price of the Notes may decline include general financial market conditions, changes in investor perception and sentiment in

relation to Westpac, the availability of better rates of return on other securities issued by Westpac or other issuers and the occurrence of a Non-Viability Trigger

Event.

• The market for the Notes may be volatile and less liquid than the market for Ordinary Shares.

• Holders who wish to sell their Notes may be unable to do so at an acceptable price, or at all, if insufficient liquidity exists in the market for the Notes.

• There is a risk that Interest will not be paid and that the Face Value will not be repaid because all payments in respect of Notes are subject to the Solvency Condition

being satisfied. However, any unpaid Interest will accumulate with compounding (unless Conversion occurs, in which case, accrued but unpaid Interest will not be

paid).

• The Interest Rate will fluctuate (increase and/or decrease) over time with movements in the 90 day Bank Bill Rate.

• There is a risk that the Interest Rate may become less attractive compared to returns available on comparable securities or investments.

• The value of Ordinary Shares received for each Note that is Converted upon the occurrence of a Non-Viability Trigger Event may be significantly less than the Face

Value of each Note.

• If for any reason Conversion of Notes is not possible following the occurrence of a Non-Viability Trigger Event (for example, due to applicable law, order of a court or

action of any government authority), those Notes will be Written-off and all rights of Holders (including to interest payments and repayment of Face Value) in respect

of those Notes will be terminated. Your investment will lose its value and you will not receive any compensation.

• The price used to calculate the number of Ordinary Shares to be issued on Conversion may be different to the market price of Ordinary Shares at the time of

Conversion because the price used is based on the VWAP during the 5 Business days immediately preceding the Conversion Date. Also, the Conversion Number

is subject to the Maximum Conversion Number. The value of Ordinary Shares you receive may therefore be significantly less than the value of those Ordinary

Shares based on the Ordinary Share price on the Conversion Date.

• Redemption, Conversion or Write-off may occur in certain circumstances before the Maturity Date, which may be disadvantageous in light of market conditions or

your individual circumstances.

• In the unlikely event of a Winding Up, if the Notes are still on issue, they will rank ahead of Ordinary Shares, equally among themselves and with other Equal

Ranking Capital Instruments but behind Senior Creditors, including depositors and all holders of Westpac’s senior or less subordinated debt.

• If there is a shortfall of funds on a Winding-Up to pay the claims of Senior Creditors and holders of other Equal Ranking Capital Instruments, Holders will lose all or

some of their investment.

• Westpac may issue further securities which rank equally with, or ahead of, the Notes.

This is a summary of the key risks only. You should read Section 6 “Investment risks” of the Westpac Subordinated Notes II Prospectus in full before

deciding to invest (including “Investment Risks Relating to Westpac”).

23

Key risks of Westpac Subordinated Notes II

WESTPAC SUBORDINATED NOTES II€¦ · registered under the United States Securities Act of 1933,...

Documents

Transcript of WESTPAC SUBORDINATED NOTES II€¦ · registered under the United States Securities Act of 1933,...