Westpac Wealth Market Update Presentation

Wealth Update
March 2017
Brian Hartzer
Chief Executive Officer
WESTPAC BANKING CORPORATION
ABN 33 007 457 141

Investing in the wealth opportunity
2
Investments and insurance are a strategic priority

Starting from a position of strength

Scale supports investment
Significant investment now moving to commercialisation

Supporting customers through their life
3
Spend on financial services by a family through their lives ($ per annum)

Starting
Out
15-25
Retiree
65+
Pre-retiree
45-64
Working
25-44
15202530354045505560657075808590
Insurance
Investments (incl superannuation)
Banking
52%
37%
11%
Lifetime
spend
Age
Source: BT internal estimates. Data based on theoretical couple on an average salary commencing work at 16,
retiring at 65 and living to 90. Insurance includes home and contents and Life/TPD (not motor vehicle or health).

Serving customers through their life
BT Financial Group
4
Brad Cooper
Chief Executive, BT Financial Group

Growth and returns attractive
Strong growth profile
Superannuation funds projected to
grow close to 8%pa over the next
decade
1
•Rising superannuation guarantee
•Aging population
•Increased need to fund retirement


Banking system credit estimated
to grow around 4.5-6.5%pa in the
medium term
2

Attractive ROE (%)
3
1 Source Rice Warner, Superannuation Market Projections Report 2016. 2 Westpac Economics.
3 Cash earnings to average allocated capital for financial years ended 30 September 2015 and 2016.
5
17.5
13.8
15.8
16.1
11.0
15.0
Consumer Bank
and Business Bank
Westpac
Institutional Bank
BT Financial
Group
20152016

Significant opportunity in wealth remains
1 Source: Roy Morgan Wealth Penetration Report January 2017
.
6
18.5%
1
of Westpac Group customers have at least one BT Financial Group
product although individual segment shares are small
Westpac Group customers with a BT Financial Group product (%)
Personal super 3.3
Work-based super 4.1
Managed Investments 1.2
Life insurance 4.8
Home and contents insurance 7.3
Motor vehicle insurance 1.3
Data based on Roy Morgan Research, Respondents aged 14+ and 12 month rolling. Wealth penetration is defined as the proportion of Australians who have a Deposit or
Transaction Account, Mortgage, Personal Lending or Major Card with a Banking Group and also have Managed Investments, Superannuation or Insurance with the same
Banking Group. Westpac Group includes Westpac, St. George, Advance Bank, ASGARD, BankSA, Bank of Melbourne, BT, Challenge Bank, Dragondirect, RAMS,
Rothschild, and Sealcorp
.

BT spans wealth, private banking and insurance
7
Advice
Investments
Private Wealth
Super
Platforms
Life Insurance
General Insurance
510 Salaried advisers
589 Magnitude and Securitor advisers
$32bn FUM
2
$1bn Deposits, $2bn Margin lending
$21bn Deposits, $2bn FUA
3

$17bn Mortgages
$36bn FUM
2
& FUA
3
.
Retail
4
18% share
5
.Corporate 13% share
5

$110bn FUA
3
,19% share
5
, Rank 1
5


$4bn Deposits
$973m Life in-force premiums
10%
6
/11%
7
Market share
5

$503m Gross written premiums
Insurance


Funds
Management



Financial reporting Business divisions Dimensions
1
Lenders Mortgage
Insurance
$287m Gross written premiums
FY16
Cash earnings $309m

FY16
Cash earnings $520m

1 At 30 September 2016. 2 Funds under management. 3 Funds under administration.
4 Excludes cash management trusts. 5 Source for market share is Strategic Insights
September 2016. 6 Market share in-force premiums. 7 Market share new business.

Well positioned for superannuation growth
•Service based model
•Positioned across value chain
•Strong customer relationships
and adviser network
•Scale allows us to
– Absorb margin contraction
– Maintain low prices
– Support compliance
infrastructure



8
Australian superannuation funds under management
1
($bn)
2,110
6,616
20162031(forecast)
Post retirement
Pre retirement
7.9%
CAGR
2016-2031(f)
7.8%
8.2%
MySuper
SMSF
Other
1 Source: Rice Warner, Superannuation Market Projections Report 2016
(nominal dollars).

Wealth industry - a strong regulatory framework
9
• Further investment in monitoring and detection
• Fee for service model for advisers since 2011
• Product incentives removed for tellers and
personal bankers, incentives balanced
between service and sales
•Led industry in raising professional
standards for financial planners
• First to launch an online ‘adviser
register’
• Led development of new industry
reference checking protocols


• Comprehensive income product for retirement (CIPR)
• Future of financial advice (FOFA)
• Life Insurance Framework
• Life Insurance Code of Practice
• Corporations Amendment
(Professional Standards of
Financial Advisers) Act 2017

Proactively
responding
Industry/
customer
implications
Significant
reform
underway
• Sales impacted by uncertainty/complexity of rules
•Increase in compliance costs, and costs to customer

Operating a different model in Life Insurance...
10
Distribution
skewed to higher
return channels
Strategy
• No exposure to legacy group insurance products
• Minimal exposure to legacy income protection products
• Reinsurance program for income protection and long tail risks
Other distribution
channels/ product
Market average ROC
3
<10%
• Fairness, transparency & empathy
• Focused on wellbeing, rehabilitation
Customer oriented
claims philosophy
• 1
st
to introduce 24 month terminal illness cover
• High IRESS ratings across products
Leading products
Carefully
managed risk
IFA risk
specialists
IFA generalists
IFA wealth
specialists
Salaried
advisers
Group master
trust
Group insurance Direct
BT distribution channels
closer to customer
Market average ROC
3
>10%
1
1 IRESS insurance research. 2 Management estimates and industry benchmarking. 3
Return on capital. 4 Group insurance excluding Master Trust schemes, covering schemes
outsourced by public sector funds, industry funds, and external corporate funds.
2
4

...and delivering superior outcomes
1 Source Strategic Insights September 2016 (lapse rates for individual risk).
11
11.9
15.3
17.7
15
18.2
BTPeer 1Peer 2Peer 3Peer 4
8.5
17.9
15.3
12.6
12.7
10.3
16.1
13.8
12.8
10.3
BTPeer 1Peer 2Peer 3Peer 4
FY13FY16
+1.8
-1.8
-2.4
+0.2
-1.5
FY16 Market average 15.1%
Growing
share
Superior
retention
Market share of Life in-force premiums
1
(%)
Life insurance lapse rates
1
FY16 (%)
11
Change in
market share
FY13-FY16
% pts

Life Insurance – three next steps
12
Investing in the
customer experience
Capturing opportunities in
corporate master trust
Enhancing
capital efficiency
• Digital quoting, origination,
and underwriting
• New wellbeing portal
• New life-stage based
products
• Digital interface with medical
professionals
• Complete integration with
Panorama in the future
• Industry shake-out has
created opportunity to
selectively offer group
insurance
• Master trust sub-segment
has better risk/return profile
than other group insurance
classes
• $250m in capital efficiencies
identified
• Requires restructuring of life
insurance entities
• Benefits expected over
FY17 and FY18
• Will add to Westpac Group’s
common equity Tier 1 capital
Likely to see
Life insurance
ROE rise
Diversify revenue
streams
Improved efficiency
and retention

Panorama will enable substantial restructuring
13
Transforming the
business
Efficiency
Grow revenue,
including in new
segments
Banking and
wealth
experienced
aligned
Panorama is the new operating system underpinning BTFG’s operations
• Development first commenced in 2012
• Total expected cost of around $630m. $390m spent to date (at 30 Sept 2016)
• Completion cost includes migration of old platforms
• Not just a platform
but bringing a
complete change to
BT’s business
• Ultimately expected
to deliver over $120m
of cost savings per
annum
• Helps offset
business as usual
expenses increases
• Creates a genuine
end-to-end solution
for SMSF
• Managed portfolios
• Included in online
and mobile
platforms
• Linked into secure
bank payments
system

Transforming the business
BT Financial Group
John Shuttleworth
General Manager, Platforms & Investments

Panorama – a transformational operating system
15
Panorama is simplifying our superannuation and investments business, offering
advisers and investors access to a broad range of portfolios and investments
BT
Cash
Te r m
Deposits
Managed
Funds
Managed
Portfolios
Listed
Securities
Tailored
Portfolios
Mobile
Intuitive
design
Click to
chat
Service
Digital
processing
Investments
SMSF
Super
Insurance
Portfolios
Investment
capability
Customer Experience

SMSFs provide a significant opportunity
1 APRA Quarterly Superannuation Performance, December 2016.
2 Rice Warner, Superannuation Market Projections 2016 (nominal dollars).
3 ATO, SMSF Statistics, September 2016 (as at June 2016).

16
Market Westpac Position
120,000 – SMSFs via BTFG’s
adviser and licenced accountant
distribution network
100,000 – SMSFs with a linked
bank deposit account
$654bn - assets today
1
~$1tn – assets in 7 years
2

574,988 - SMSF funds
3

33,022 – funds
established in FY16
3

Nearly $1 in every $3 in superannuation is invested through a self-managed
superannuation fund
BTFG has a significant opportunity to consolidate and grow established
relationships onto the Panorama platform

Product complexity – >50 products and platforms
17
Red = closed to new investors
Over time, growth and acquisitions has led to product and platform duplication.
Migration to Panorama will simplify

Moving from 7 systems to one core operating system
18
System Heritage Age Products
APS1 Asgard 1991 (26) Super & M/T
AFS2 Asgard 2001 (16) Asgard Wrap
TRUAIO BT 1997 (20) BT Wrap
Wrap (Core) BT 1997 (20) BT Wrap
Retail BT 1991 (26) BT Retail
Westpac 1987 (30) Westpac Retail
Westpac 1987 (30) BT PPS (M/T), PPM
BT 1994 (23) BT Corporate Super
BTFG 2007 (10) BT Super for Life
Modernising technology and consolidating registry systems into one platform
CLOAS
Composer
Capital
Asgard
WIAS
Trust
Wrap

Reducing cost and complexity
19
Adviser
Desktops
Basil Earthrise BTOE
Quick
Address
Pro
Journo
Investor
Desktops
CLOAS
Composer Capital
Asgard
WIAS
Trust
Error
Cost
Fixed
Term
Annuity
Fixed
Term
Pension
SALAD
Daily
Funding
GPT Doc E Admin
MF Hybrid
Dashboard
Summary
Trades
Outstand
Antidetri
ment
Calc
Insurances
witch letters
Rapid
Reds
SLS Print
GUI
Cloas
GVC DB
ECPIAS
SRS
Wrap
Reds
Data
Disability
Calc
Fee
Check
report
FUM DB
EOL PIN ECRA
Diary
Corro
Zorro GIP Calc
Journal
DB SRS
Adhoc
Fees
MF
Trading
Summary
Desk
Banks
Super
benefit
calc
WHT
Calc
AESA
Emp
Extract
Decease
Estates
DB
Wrap
Extract
Smart
label
Printer
GUI MIH
Forms
Wrap
Calc
Wrap MF
Transfers
Trade
sheets-
Reds
Death
Benefit
Calc
PAYG
PresCom
Stats
SIM &
SIMA
Load
Bank
Statets
Gearing
Macro
FMStats
Analysis
STAR
GW
Admin
TOAD
DSS
Letter
Links
Client
Reporting
Intranet
ART
SWEC ASCALC TLM
Diary
System
Cognos
Reports
Redirect
Cognos
CUBE
builds
Client
Reports
Archive
Pres
Sched
(Client)
TRAMS SSRA
WHT
CPU Calc
Summary
for F M
Gearing
DB
AMA
Negative
Cost
base calc
MS
Query
Responsi
ble
Service
Teams
Tool
PolCom
Corp
Super
CS
Transition
DB
LSEP
Bulk
Upload
UTD
Final
APS
Excede
GL
Sun GL
Paymt
Maint
System
Research
DB
Ecomm
Admin
CapLink
BTOE
Admin
EPT
Wrap
Admin
DT
ProRata
MF Reds
Elmo
Form
Repository
Easy
Rollover
Tool
Ebuy
CAPS
Contributi
ons Calc
Insuff
Funds SS
Wrap
Fee
Signaller
CE Fee
Statemen
ts
WCA
Desktop
Scrape
Wrap
BING
Error
Manual
SRS Red
>500 end user applications are linked to our existing registry systems
Existing registry systems

Reducing multiple trustees and super funds
20
Trustees Super Funds
BTFM
Retirement Wrap
BT Lifetime Super
BTFM2 BT Classic Lifetime Super
WSAL
Westpac Master Trust
Westpac Personal Super
BT Super Savings
ACML
Asgard Independence Plan Div 1
Asgard Independence Plan Div 2
Asgard Independence Plan Div 4

Advance Retirement Savings Acct
Advance Retirement Suite
Beacon Independence Plan Div 2
Reduction will deliver
•Access to best in class
products for customers
•Lower system/
maintenance costs
•Reduce costs (audit and
regulatory levies),
•Lower risk from reduced
complexity

Materially simplifying our business
21
From To
Products >50 3
Trustees 4 1
Super funds 12 1
Registry systems 7 1

Progress
22

23
Investment
platform
with all
assets

24
Personal
super for
advised
customers

25
Redefining
SMSF - a
complete
end-to-end
offer for
investors,
advisers and
accountants
Modular structure
Functionality

26
Direct
investment offer
- BT Invest -
through online
banking

27
Panorama
connected to core
banking systems

28
Launched mobile
where advisers
and investors
can view and
trade their
portfolios

Building momentum in Panorama
29
3,696
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FUA on Panorama ($m)
6,038
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Investors on Panorama (#)
2,984
0
500
1,000
1,500
2,000
2,500
3,000
3,500
SMSF Funds on Panorama (#)
Advisers using Panorama (#)
955
0
200
400
600
800
1,000
1,200

Panorama – a unique offer for investors and advisers
30
One core operating
system
Bank connectivity/
security
• One operating system for super, investments, SMSFs and insurance
• Broad range of investments – cash, term deposits, managed funds, listed
securities, managed portfolios, tailored portfolios
Digital user
experience
SMSFs
One system for
investors & advisers
• Integrated with bank infrastructure and secure bank payment systems
• View investments, banking and insurance in one place
• Use online banking to originate wealth products and transfer funds
• Fast sign-up to BT Invest in minutes via online banking
• Access via desktop, mobile or tablet
• Online processing, document vault, data feeds and click to chat
• Unique end-to-end solution – establishment, fund administration,
investment administration, audit and reporting
• Enables advisers, investors and accountants to view fund information
• One platform for simple to comprehensive solutions
• Seamlessly move from MySuper to SuperWrap without asset sale/purchase
• Investors can manage via a financial adviser or use the platform directly

BT Financial Group
31
Brad Cooper
Chief Executive, BT Financial Group

Summary
Strong franchise
Investing while
others pull back
Well placed across the
wealth value chain
Short-term headwinds
although significant
long-term opportunities
Panorama will
extend leadership
Scale and growth
will mitigate
margin pressure
32

Investor Relations Team
33
Andrew Bowden
Head of Investor Relations
+61 2 8253 4008
andrewbowden@westpac.com.au

Nicole Mehalski
Director
+61 2 8253 1667
nicole.mehalski@westpac.com.au

Visit our updated investor centre at
www.westpac.com.au/investorcentre



Jacqueline Boddy
Director
+61 2 8253 3133
jboddy@westpac.com.au

Louise Coughlan
Director (Rating Agencies)
+61 2 8254 0549
lcoughlan@westpac.com.au
Retail Shareholder Investor Relations
Danielle Stock
Senior Manager
+61 2 8253 0922
danielle.stock@westpac.com.au

Rebecca Plackett
Senior Manager
+61 2 8253 6556
rplackett@westpac.com.au

or email: investorrelations@westpac.com.au
For further information
Equity investor relations
Debt investor relations
Retail shareholder investor relations

Disclaimer
The material contained in this presentation is intended to be general background information on Westpac Banking Corporation (Westpac) and its activities.
The information is supplied in summary form and is therefore not necessarily complete. 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 Australian dollars unless otherwise indicated.
Unless otherwise noted, financial information in this presentation is presented on a cash earnings basis. Cash earnings is a non-GAAP measure. Refer to Westpac’s Full Year
2016 Financial Results (incorporating the requirements of Appendix 4E) for the twelve months ended 30 September 2016 available at www.westpac.com.au for details of the basis
of preparation of cash earnings.
This presentation contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the US Securities Exchange Act of 1934. Forward-looking
statements are statements about matters that are not historical facts. Forward-looking statements appear in a number of places in this presentation and 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, financial support to certain borrowers, indicative drivers, forecasted economic indicators and performance metric outcomes.
We use words such as ‘will’, ‘may’, ‘expect’, 'indicative', ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘aim’, probability’, ‘risk’, ‘forecast’, ‘likely’, ‘estimate’, ‘anticipate’,
‘believe’, or similar words to identify forward-looking statements. These forward-looking 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 us. There can be no assurance that future developments will be in accordance with our expectations or that the
effect of future developments on us will be those anticipated. Actual results could differ materially from those which we expect, depending on the outcome of various factors.
Factors that may impact on the forward-looking statements made include, but are not limited to, those described in the section titled ‘Risk factors' in Westpac’s 2016 Annual Report
available at www.westpac.com.au. When relying on forward-looking statements to make decisions with respect to us, investors and others should carefully consider such factors
and other uncertainties and events. We are under no obligation to update any forward-looking statements contained in this presentation, whether as a result of new information,
future events or otherwise, after the date of this presentation.
34