westpac new zealand limited year ended 30 september 2013 ... · 4q12 1q13 2q13 3q13 4q13 107 2.53%...

:

Westpac New Zealand Limited Year Ended 30 September 2013 Investor update

January 2014

: 2

The material contained in this presentation is intended to be general background information on Westpac Securities NZ Limited and

Westpac New Zealand Limited and their activities. It should not be reproduced, distributed or transmitted to any person without consent of

Westpac New Zealand Limited and is not intended for distribution in any jurisdiction in which such distribution would be contrary to local

law or regulation.

The information is supplied in summary form and is therefore not necessarily complete. It does not constitute a prospectus, offering

memorandum or other offering document or an offer of securities. 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.

The material contained in this presentation may include information derived from publicly available sources that have not been

independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information.

All amounts are in New Zealand dollars unless otherwise indicated. All financial data in this presentation is as at 30 September

2013 unless otherwise stated.

This presentation contains statements that constitute “forward-looking statements” within the meaning of section 21E of the United States

Securities Exchange Act 1934. Forward-looking statements are statements about matters that are not historical facts. 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.

We use words such as ‘will’, ‘may’, ‘expect’, 'indicative', ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘probability’, ‘risk’,

‘forecast’, ‘likely’, ‘estimate’, ‘anticipate’, ‘believe’, or other similar words to identify forward-looking statements. These statements reflect

our current views with respect to future events and are subject to change, certain risks, uncertainties and assumptions which are, in many

instances, beyond our control and have been made based upon management’s expectations and beliefs concerning future developments

and their potential effect upon Westpac Securities NZ Limited and/or Westpac New Zealand Limited. Should one or more of the risks or

uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from the expectations

described in this presentation. Factors that may impact on the forward-looking statements made include those described in the section

entitled “Principal risks and uncertainties” in the Management Report in the Westpac Securities NZ Limited Financial Statements for the

year ended 30 September 2013. When relying on forward-looking statements to make decisions with respect to Westpac Securities NZ

Limited and/or Westpac New Zealand Limited, investors and others should carefully consider such factors and other uncertainties and

events. We are under no obligation, and do not intend, to update any forward-looking statements contained in this presentation.

: 3

Franchise and Strategy

Financial Results and Trends

Capital Structure

Wholesale Funding

NZ Economic Outlook

NZ Housing Portfolio

: 5

Award winning

Key Financial Data Year ended

30 Sept 2013

Change

2013 - 2012

Net profit after tax $714m 16%

Cost to income ratio 42.5% 100bps

Impairment charges $107m 44%

Total gross loans $62b $2b

Total deposits $47b $4b

Common equity Tier 1 ratio 12.3% n/a

Kanga News – New Zealand Domestic Issuer of the

Year 2013

The Asian Banker – Strongest Bank Balance Sheet New

Zealand

Credit Ratings (Short term / Long term / Outlook)

Standard and Poor’s A-1+ / AA- / Stable

Moody’s Investor Services P-1 / Aa3 / Stable

Fitch Ratings F1+ / AA- / Stable

Market share1 As at 30 Sept 2013

Consumer lending 20%

Retail deposits 21%

WNZL at a glance

• One of new Zealand’s largest banking organisations

• Regulated by the Reserve Bank of New Zealand (RBNZ)

• A wholly owned subsidiary of Westpac Banking Corporation,

operating Westpac’s consumer, business and institutional

banking operations in New Zealand

• Strategy focused on organic growth within New Zealand

• Strong franchise with over 200 branches nationwide and

1.3m customers

1.Source: RBNZ

:

Westpac Group

Westpac Life New Zealand

BT New Zealand

Westpac Securities NZ Limited

(WSNZL)

New Zealand Australia

Westpac New Zealand

Limited (WNZL)

Locally incorporated Bank, wholly owned but not guaranteed by Westpac Banking Corporation

Comprises Westpac’s consumer, business and institutional banking operations in NZ

Financial performance disclosed via quarterly WNZL Disclosure Statement (DS)

Guarantor for WSNZL funding programmes

A wholly owned subsidiary of WNZL

Unconditional and irrevocable guarantees of funding programmes from WNZL

Provides offshore wholesale funding for WNZL through its London branch

6

:

Higher growth in target segments,

including Agri, SME, MyBank

Targeted growth to

optimise the portfolio

Continued

strengthening of

balance sheet

Continued activity in the

wholesale market

Maintain strong ROE with a focus

on margin management

Efficient use of capital

Disciplined cost

management

Reshaping the

distribution channels

for business efficiency

8

Strength

A strong

company

Growth

Various

drivers

Productivity

Continued

improvement

Return

Maintain

discipline

: 9

R

G

S

Improved core earnings and reduced impairment charges leading to improved cash earnings

NIM broadly maintained during FY13 despite competitive pressures

Expense to income ratio reduced to 42.48% at 30 September 2013 from 43.50% at 30 September 2012

Reduced FTE’s from 4,691 to 4,481 at 30 September 2013

Improved deposit to loan (D2L) ratio to 75.6% from 70.6% at 30 September 2012

Asset quality improving with a reduction in Business stressed exposures and housing delinquencies

Deposit growth funded loan growth as well as wholesale debt and intra-group debt reductions

Targeted mortgage (below 80% LVR) growth with business lending growth in line with system

P

: 11

1. Source: WNZL Disclosure Statements

2. FY12 includes 11 months of the institutional business which vested on 1 November 2011. FY11 excludes the institutional business.

11

(NZ$m) 1 FY11 FY12 2 FY13

Variance

($)

Variance

(%)

Net interest income 1,316 1,499 1,536 37 2%

Non interest income 308 356 371 15 4%

Net operating income 1,624 1,855 1,907 52 3%

Operating expenses (771) (807) (810) (3) (0%)

Underlying profit

/ core earnings853 1,048 1,097 49 5%

Impairment charges (224) (190) (107) 83 44%

Income tax expense (196) (245) (276) (31) (13%)

Profit after income tax expense

/ cash earnings433 613 714 101 16%

Net interest margin 2.41% 2.31% 2.29% (2 bps) N/A

ROE 10.1% 11.8% 11.5% (30 bps) N/A

Deposit to Loan Ratio 65.0% 70.6% 75.6% 500 bps N/A

Funding position 18,493 18,060 15,489 2,571 14%

: 12 12

1. Source: WNZL Disclosure Statements

2. FY12 includes 11 months of the institutional business which vested on 1 November 2011. FY11 excludes the institutional business.

3. Funded Liquids exclude inter entity cash balance between WNZL and NZ Branch, which is included in Due from related entities ($467m)

4. Excluding Registered Certificates of Deposit which are included in wholesale funding

(NZ$m) 1 FY11 FY12 2 FY13

Variance

($)

Variance

(%)

Assets

Net loans 51,250 59,422 61,585 2,163 4%

Funded Liquids 3 6,693 6,651 6,270 (381) (6%)

Due from related entities 1,565 1,575 1,424 (151) (10%)

Other assets 1,148 1,174 1,233 59 5%

Total assets 60,656 68,822 70,512 1,690 2%

Liabilities

Customer deposits 4 33,330 41,967 46,648 4,681 11%

Wholesale funding 19,186 14,337 13,179 (1,158) (8%)

Intra-company borrowings 970 4,070 2,100 (1,970) (48%)

Other due to related entities 1,806 1,579 1,097 (482) (31%)

Other liabilities 868 1,073 922 (151) (14%)

Total liabilities 56,160 63,026 63,946 920 1%

: 13

Historically… …And throughout FY13

2.33%

2.26%

2.00%

2.13%

2.25%

2.38%

2.50%

4Q12 1Q13 2Q13 3Q13 4Q13

WNZL NIM

Net interest margin (%)

Disciplined margin management

Impairment charges ($m)

Improved asset quality

Expense to income ratio (%)

Improvements in efficiency Cash earnings ($m)

Strong all round performance

Net interest margin (%)

Disciplined margin management

Impairment charges ($m)

Improved asset quality

Expense to income ratio (%)

Improvements in efficiency Cash earnings ($m)

Consistent performance uplift

59 36

21 28 22 0

20

40

60

80

4Q12 1Q13 2Q13 3Q13 4Q13

107 2.53%

2.29%

2.00%

2.20%

2.40%

2.60%

FY09 FY10 FY11 FY12 FY13

WNZL NIM

620

334 224 190 107

0

165

330

495

660


248 286 433

613 714

100

275

450

625

800


148 159 185 178 192

50

100

150

200

250

4Q12 1Q13 2Q13 3Q13 4Q13

714

42.2% 48.4% 47.5% 43.5% 42.5%

0.0%

12.5%

25.0%

37.5%

50.0%


42.5% 46.1% 41.4% 42.3% 40.1%

0.0%

12.5%

25.0%

37.5%

50.0%

4Q12 1Q13 2Q13 3Q13 4Q13

FY12 includes 11 months of the institutional business which vested on 1 November 2011. FY11 and prior excludes the institutional business.

:

65.8 66.0

67.8

70.6

75.2 75.6

64.0

67.0

70.0

73.0

76.0

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

%

42.0

46.6

1.7

2.9

40.0

42.0

44.0

46.0

48.0

4Q12 Term Call 4Q13

Deposit to loan ratio (%)

14

500bps improvement

10.95% growth

Deposits FY13 ($bn) Historical trend in deposits and mix ($bn)

19.2

23.1 24.9

14.1 18.9 21.8

-

12.5

25.0

37.5

50.0

FY11 FY12 FY13

Term Call

Customers with a Wealth product (000)

219

297 324

341

150

205

260

315

370

1H12 2H12 1H13 2H13

'000s

Call 42% Term 58%

Call 45% Term 55%

Call 47% Term 53%

$46.6bn $33.3bn $42.0bn


:

5,869 5,7876,006 6,048 6,067

4,200

4,700

5,200

5,700

6,200

4Q12 1Q13 2Q13 3Q13 4Q13

19,769 19,79819,954 20,021

20,515

19,000

19,500

20,000

20,500

21,000

4Q12 1Q13 2Q13 3Q13 4Q13

35,986 35,97836,542

37,06237,594

30,000

32,000

34,000

36,000

38,000

4Q12 1Q13 2Q13 3Q13 4Q13

59,422 59,19159,915 60,453

61,585

52,000

54,500

57,000

59,500

62,000

4Q12 1Q13 2Q13 3Q13 4Q13

15

Total net lending ($m) Gross Housing lending ($m)

Gross Agri lending ($m) Gross Business lending ($m)

3.6% growth

3.4% growth

3.8% growth

4.5% growth

+$1,670m, 2.8%

+$1,052m, 2.9%

+$561m, 2.8%

+$61m, 1.0%

:

287 299 336 358

-

100

200

300

400

FY10 FY11 FY12 FY13

382 382 384 386 384

89 95 87 94 95

0

125

250

375

500

4Q12 1Q13 2Q13 3Q13 4Q13

Non II Net II

1,164 1,316

1,499 1,536

291 308

356 371

-

500

1,000

1,500

2,000

FY10 FY11 FY12 FY13

Non II Net II

16

Operating income trends ($m) Operating income ($m)

Fee and commission income ($m) Fee and commission income trend ($m)

31% growth

3.4% growth 25% growth

$1,907m

$1,624m

$1,855m

$1,455m

85 86 84

91

97

80

85

90

95

100

4Q12 1Q13 2Q13 3Q13 4Q13


:

4555

74

101

0

20

40

60

80

100

120

FY10 FY11 FY12 FY13

Spe

nd

($m

)

FY10 FY11 FY12 FY13

4698 4,660 4,691 4,481

0

1250

2500

3750

5000

FY10 FY11 FY12 FY13

704 771 807 810

-

210

420

630

840

FY10 FY11 FY12 FY13

17

Operating Expenses ($m) FY13 Expense to income ratio vs peers

Investment and compliance spend ($m) FTE (000)

41.06%

43.86% 44.25%

42.48%

38%

40%

42%

44%

46%

Peer Peer Peer Westpac


: 18

Stress assets to TCE (%) Continued improvement in the quality of assets

5.24% 4.32%

3.35% 2.30%

0.0%

2.0%

4.0%

6.0%

8.0%

FY10 FY11 FY12 FY13

Impairment charges to gross loans (%)

Strengthening of lending book

0.10% 0.07%

0.18% 0.17%


0.09% 0.22%

0.10%

0.32%


+15bps -8bps +15bps -1bps FY13

FY12

>80% LVR as % of housing book against peers Continued improvement in the quality of housing assets

Mortgage delinquency trend (%)

Continued improvement in the quality of housing assets

23.10%22.13%

15.36%

18.65%

22.13%

21.74%20.91%

20.49%

12%

15%

18%

21%

24%

Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13Peers Westpac

0.75

0.29

0.40

0.250.29

0.12

0

0.2

0.4

0.6

0.8

Sep-10 Sep-11 Sep-12 Sep-13

90+ days 30-60 days 60-90 days


:

34,379

36,130

42,567

44,893

30,000

34,000

38,000

42,000

46,000

FY10 FY11 FY12 FY13

20

FY13 Total capital ratios (%)

Capital levels well funded

Source: Company Annual reports and 30 September 2013 Disclosure statements or equivalents

10.40% 10.40% 8.87%

12.30%

Peer Peer Peer WestpacCET1 T1 T2

12.61% 12.30% 12.40% 11.90%

Tier 1 capital ratio (%)

Continued re-investment in capital

9.5% 9.9% 10.5% 12.0% 12.3%

0.0%

3.5%

7.0%

10.5%

14.0%


Basel III Basel II

Risk weighted assets trend (%)

Improving asset quality

Return on equity (%)

Strong return with reinvestment of profits

7.30%

10.10% 11.80% 11.50%

0.0%

3.0%

6.0%

9.0%

12.0%

FY10 FY11 FY12 FY13


:

11.9 12.1 12.3

10.5 12.0 11.7

11.9 12.1 12.3

13.0

14.1

13.1 13.0 12.1 12.3

0

5

10

15

20

Sep-11 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13

Total common equity Tier 1 Total Capital

WNZL regulatory capital ratios (%) FY13 capital ratios Basel III (%)

Basel III Basel II

3,470 4,600 4,600 4,600 4,600 4,600

967

1,079 1,237 1,425 1,602 1,818

970

970 500 500

1,000

2,500

4,000

5,500

7,000

Sep-11 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13

Equity Retained earnings Subordinated debt

WNZL equity composition ($m)

21

Capital adequacy ratios

Common Equity Tier One Capital ratio 12.3

Tier One Capital ratio 12.3

Total Capital ratio 12.3

Reserve Bank minimum ratios

Common Equity Tier One Capital ratio 4.5

Tier One Capital ratio1 6.0

Total Capital ratio 8.0

Buffer ratios

Buffer ratio2 4.3

Buffer ratio requirement2 2.5

1. Prior to a change in the Conditions of registration that took effect on 1 January 2013, locally incorporated registered banks having the benefit of the Wholesale Funding Guarantee Facility were required to maintain an additional 2% Tier One Capital ratio buffer above the then 4% regulatory minimum. Following the change, all locally incorporated registered banks are required to hold a minimum Tier One Capital ratio of 6%. 2. As at 30 September 2013, there was no prescribed minimum regulatory buffer. A prescribed minimum regulatory ratio of 2.5% came into effect from 1 January 2014.

:

Commentary

Core Funding

Funding composition

23

Core Funding comfortable above RBNZ minimum.

Term maturities well spread for manageable annual refinancing task

On going reduction on reliance on offshore funding markets (27% FY10 to 12% FY13).

Term maturities

50%

60%

70%

80%

90%

100%

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

WNZL Core Funding Ratio RBNZ Min Core Funding Ratio

: 24

Source: Company Annual reports and 30 September 2013 Disclosure statements or equivalents

28.40%

20.70% 22.60%

20.60%

15.0%

18.0%

21.0%

24.0%

27.0%

30.0%


2,776 , 21%

1,534 , 12%

8,869 , 67%

CP RCDS Term debt issues

$13b

Total funding composition (%)

57 57 63 68

34 34 23 205 3

9 9 10 9

FY10 FY11 FY12 FY13

Deposits Wholesale Funding Intercompany Debt Equity

Wholesale funding (%) Wholesale funding by currency (%)

FY13 wholesale funding to total liabilities (%)

Active management of wholesale debt

28%

23%21%

16%

12% Domestic Medium Term Notes

Euro Medium Term Notes

US Commercial Paper

Covered Bonds

Certificates of Deposit

39%

31%

23%

6%

1%

NZD

USD

EUR

CHF

Other


:

5.57.1 7.2 6.9

4.0

4.0 4.0 4.0

0.0

3.0

6.0

9.0

12.0

FY10 FY11 FY12 FY13

Funded Unfunded

17%

4%

4%

22%

4%12%

37%

Cash

Due from other financialinstitutions

Supranational securities

NZ Government securities

NZ Local Authoritysecurities

NZ Corporate securities

RMBS

Commentary

Liquid assets ($bn)

Liquid assets composition

25

Funded liquid assets have remained relatively stable over last 3 years.

Liquid asset coverage of wholesale funding maturities continues to strengthen.

Periodic changes in liquid assets reflects liquidity management activities undertaken in response to wholesale maturities to maintain compliance with internal and regulatory requirements.

Asset portfolio diversified

Liquid assets as % short term funding

:

Region Population

Northland 158,400

Auckland 1,507,600

Waikato 416,200

Bay of Plenty 277,300

Gisborne 46,800

Hawke's Bay 155,000

Taranaki 110,100

Manawatu-Wanganui 232,500

Wellington 490,100

Tasman 48,400

Nelson 46,600

Marlborough 45,700

West Coast 32,900

Canterbury 558,800

Otago 211,200

Southland 94,900

Statistics NZ Estimate as at June 2012 4,432,500

Northern (53% of population)

Central (24% of population)

South (23% of population)

Source: Statistics NZ, 2006 Census

27

:

Westpac forecast a strong NZ economy through 2014, following on from a robust Q3 in 2013, highlighted by a 1.4% rise in GDP.

September’s GDP highlights the robust recovery to farm production following the drought earlier in the year, along with the continued positive impact of the Christchurch rebuild as this continues to gain momentum.

Westpac expects the construction sector to accelerate further, providing the main source of economic growth over the next couple of years, driven by Christchurch, and Auckland, where net migration feeds an already tight property market.

Post-earthquake building in Canterbury is expected to ramp up further . Latest official estimates of the total cost of reconstruction in Canterbury are NZ$40bn, or about 20% of annual GDP. This activity – largely funded by global reinsurance payouts – is expected to be spread over a decade or more, but to peak in 2015.

Higher house prices are also expected to encourage greater construction activity in Auckland. A housing shortage in Auckland developed after the 2008/2009 recession as a result of strong population growth and a construction downturn.

House prices are expected to continue rising throughout 2014 and 2015, albeit at a slower rate as interest rates rise. Recently introduced restrictions on mortgage lending to low-deposit borrowers are also expected to slow the market, albeit modestly.

Government austerity is expected to continue to constrain growth in government-related industries, and the high exchange rate will remain a considerable challenge for the export and import-competing sectors.

Overall, we expect a further steady improvement in economic growth, with GDP reaching 3.7% by early 2015.

28

:

Unemployment Rate

29

Net Immigration (’000s)

World Prices for NZ commodities GDP Growth – Annual change

-4

-2

0

2

4

6

8

-4

-2

0

2

4

6

8

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

% %

Source:

Forecast

50

100

150

200

250

300

350

50

100

150

200

250

300

350

1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016

Index Index

3

4

5

6

7

8

9

10

11

12

3

4

5

6

7

8

9

10

11

12

1990 1993 1996 1999 2002 2005 2008 2011 2014

% %

Forecast

Forecast

-40

-30

-20

-10

0

10

20

30

40

50

60

-100

-50

0

50

100

150

1992 1995 1998 2001 2004 2007 2010 2013 2016

Net (right axis) Arrivals Forecast

:

House prices by region

30

Average Prices

House prices inflation Christchurch rebuild

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2011 2013 2015 2017 2019 2021

$bn $bn

Residential

Commercial

Infrastructure

Estimate Forecast

-15

-10

-5

0

5

10

15

20

25

30

-15

-10

-5

0

5

10

15

20

25

30

2000 2002 2004 2006 2008 2010 2012 2014 2016

% %

Forecast

75

80

85

90

95

100

105

110

115

120

125

130

75

80

85

90

95

100

105

110

115

120

125

130

2006 2007 2008 2009 2010 2011 2012 2013

2007 peak = 100

2007 peak = 100 Auckland

Wellington

Christchurch

Rest of North Island

Rest of South Island

Nov-13 Nov-12 Change

New Zealand $460,067 $421,497 9.2%

Auckland Area $685,350 $594,856 15.2%

Wellington Area $448,325 $435,468 3.0%

Christchurch City $450,049 $400,496 12.4%

Hamilton City $356,829 $338,384 5.5%

Tauranga City $438,540 $423,865 3.5%

Queenstown-Lakes District $638,630 $614,249 4.0%

:

Rental vacancy rates

31

Commentary

House affordability Leverage and Servicing

0

2

4

6

8

10

12

14

16

0

20

40

60

80

100

120

140

160

180

1991 1994 1997 2000 2003 2006 2009 2012

% %

Household debt as % nominal disposableincome

Servicing as % nominal disposable income

0

5

10

15

20

25

0

1

2

3

4

5

6

1990 1992 1994 1997 1999 2001 2004 2006 2008 2011

Ratio Ratio

House price-to-income ratio (left axis)

Lower quartile house price-to-median rent (rightaxis)

• House leverage at historically high levels

• Mortgage servicing aided by historically low

rates

• Rental vacancy rate low driven by general

housing shortage.

:

NZ interest rate markets

32

Commentary

90 day rate projections 90 day interest rates

• NZ bill rates have been stable at historical lows

for 4 years

• The broader market consensus is that rates

will begin to rise in Q1 2014

• Rates rises over next 2 years around 2.5%

• Swap rates reflect expectations

0

2

4

6

8

10

12

14

16

0

2

4

6

8

10

12

14

16

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017

% %

Forecast

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Nov-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16

% % RBNZ projection (SepMPS)Swap market pricing

Westpac Economicsforecast

: 34

40%

10%8%

42%

Home loan Portfolio - Regional Profile

Auckland Wellington Christchurch Rest

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0<=60 60<=70 70<=80 80<=90 90<=95 95+

Home Loan Portfolio - LVR Profile

• Mortgage portfolio of $37.5bn.

• Geographic profile consistent with

population concentrations of New Zealand.

• Well secured book with low LVR profile.

• Growth in above 80% LVR lower than peers.

10%

15%

20%

25%

30%

Ma

r-1

1

Ma

y-1

1

Jul-

11

Se

p-1

1

No

v-1

1

Jan

-12

Ma

r-1

2

Ma

y-1

2

Jul-

12

Se

p-1

2

No

v-1

2

Jan

-13

Ma

r-1

3

Ma

y-1

3Home Loan Portfolio - Above 80% LVR Proportions

WNZL Peer 1 Peer 2 Peer 3 Peer 4

: 35

22%

16%

9%9%7%

37%

Home loan Portfolio - Maturation Profile

Less than 1 year 1 to 2 years 2 to 3 years

3 to 4 years 4 to 5 years 5 + years

0%

5%

10%

15%

20%

25%

30%

35%

40%

$0

-$

150

k

$1

50k

-$

250

k

$2

50k

-$

500

k

$5

00k

-$

750

k

$7

50k

-$

1m

$1

m +

Home Loan Portfolio - Original Loan Amount

• Majority of lending concentrated in lower loan amounts (less than $500k).

• Less than 3% of the portfolio are large loan sizes above $1m. Limits exposure to higher value market segments that are typically more volatile in a downturn.

• Well seasoned book with 37% of the portfolio past 5+ years maturation. This provides significant equity buffers from home price appreciation and loan schedule reduction.

• 52% of the portfolio is already past peak delinquency development (3+ years vintage maturation).

: 36

• Delinquency rates continue to improve for both 30+ and 90+ day arrears.

• Driven by improved underwriting standards and strengthening New Zealand housing market and economy.

• Loss rates stable and continue to run at less than 1% annualised.

• More recent vintages performing strongly.

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

Oct

-11

No

v-1

1

De

c-11

Jan

-12

Feb

-12

Ma

r-12

Ap

r-1

2

Ma

y-1

2

Jun

-12

Jul-

12

Au

g-1

2

Sep

-12

Oct

-12

No

v-1

2

De

c-12

Jan

-13

Feb

-13

Ma

r-13

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-

13

Au

g-1

3

Sep

-13

Mortgage Portfolio - Delinquency Rates

90+ Days Delinquent 30+ Days Delinquent

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37

Home loan Portfolio - 30+ Vintage Performance

2006 2007 2008 2009 2010 2011 2012

0.00

0.20

0.40

0.60

0.80

1.00

1H

09

2H

09

1H

10

2H

10

1H

11

2H

11

1H

12

2H

12

1H

13

2H

13

Home Loan Portfolio - Half Year Loss Rates

: 37

• Advance payments driven by customers maintaining scheduled payments at historical levels after rate falls.

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Jan-13

Feb-13

Mar-13

Apr-13

May-13

Jun-13

Jul-13

Aug-13

Sep-13

Housing Loans - Payments In Advance

% of Total Outstandings

30 to <60 days 60 to <90 days 90 days plus

:

1 - 10 days Payment retry

1 - 21 days Branch/Relationship contact

21 - 30 days Phone Call - Dialler

32 days Letter – penalty interest

39 - 45 days Phone Call - Dialler

46 days Letter – intention to list default

46 - 80 days Phone Call – Dialler and Manual

80 days Issue Demand

90 days Demand expires – transfer to Recoveries

90+ days Assess strategy – contact borrower – repayment arrangement agree/monitor Instruct Solicitors to issue Property Law Act Notice Instruct / obtain Registered Valuation to confirm ERV and assess provision

120+ days On expiry PLA, obtain two market appraisals and instruct mortgagee sale proceedings, marketing campaign usually four weeks

150+ days Day of auction set reserve price and if met, settlement four weeks later

180+ days Attend to settlement and assess any shortfall, any ongoing actions including Bankruptcy

39

:

For further information contact:

Jim Reardon

Treasurer

Westpac New Zealand Limited

+64 9 367 3539

[email protected]

John Toro

Westpac Securities NZ Limited

+44 20 7621 7540

[email protected]

For further information on WNZL and WSNZL:

Funding and Securitisation

Programmes

WNZL Disclosure Statement

WSNZL Financial Statements

Please visit our investor website:

www.westpac.com.au/investorcentre/fixed-income-

investors/ Click on “Westpac New Zealand” or

“Westpac Securities NZ Limited”

40

westpac new zealand limited year ended 30 september 2013 ... · 4q12 1q13 2q13 3q13 4q13 107 2.53%...

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