Resetting Westpac’s wealth strategy

Resetting Westpac’s
wealth strategy



19 March 2019
Westpac Banking Corporation | ABN 33 007 457 141

Recap: 2019 priorities
1 FY18 cost base includes Hastings costs of $158m and remediation/litigation costs of $112m. For FY19, the 1% reduction we are seeking to achieve excludes any potential remediation related costs/litigation and the
impact of new accounting standards. Also excludes one-off costs associated with the changes announced today.
1
Deal with
outstanding issues
Structural cost
reduction
3
Momentum in
customer franchise
2
• ‘Get it right, put it right’ initiative
• Customer remediation programs
• Royal Commission response
• Advice model
• Roll out of Customer Service Hub
• Accelerate growth in Panorama
• Continue migration to digital sales and service
• Lift productivity to ~$400m
• Targeting 1% cost reduction on FY18
1
Overview
2
Resetting Westpac's Wealth Strategy - March 2019

Resetting our wealth strategy
Resetting Westpac's Wealth Strategy - March 2019
•Committed to supporting customers’ insurance, investment and
superannuation needs
•Exiting personal advice by salaried and aligned planners by Sept 2019
•Extending our advice referral model over time, including Viridian
•Retaining brand, however BT Financial Group (BTFG) no
longer a standalone division
‒Insurance to be integrated into expanded Consumer division
‒Private Wealth, Platforms, and Super to be integrated into
expanded Business division
•Reorganising executive responsibilities
•Expected to be EPS accretive
1
in 2020: removing loss making
business, including $280m pa in cost reduction




Overview
1 EPS excludes any remediation costs
3

Financial advice market shifting to independent advisers
568
541
490
389
624
593
521
414
1192
1134
1011
803
Sep-15Sep-16Sep-17Sep-18
SalariedAligned
BT adviser numbers have
reduced significantly over the
last four years
The percentage of Australian
planners under licence to major
Banks/AMP has steadily
declined. We expect this trend
to continue
1 Source: ASIC Adviser Register. 2 At 14 March 2019.
IFA
Bank / AMP salaried
and aligned
61
63
67
70
77
39
37
33
30
23
Mar-15Mar-16Mar-17Mar-18Mar-19
Total Australian financial advisers
1
(%)
BTFG financial advisers (salaried & aligned) (#)
Advice
2
4
Resetting Westpac's Wealth Strategy - March 2019

Professionalisation of the Advice industry
Advice
External referral
trial with Viridian
Advisory in
Victoria
• Continue to explore
digital advice
• Further expand
personal advice
referral panel
• Westpac not accepting
new advice customers;
continue supporting
existing customers until
expected completion
date of 30 June 2019
• Offers for ~175 people to
transfer to Viridian
Advisory (90 planners)
as part of our exit from
advice
• Cease to offer face-to-
face personal advice on
all licenses by 30
September 2019
Enhancements
made to the
model based on
client experience
After commencing in
Melbourne, pilot extended
to SA, WA and ACT
Pilot
commenced
February 2018
Refined
referral model
Transitioning to
a full referral
model
Evolve and
expand model
5
Feedback from
both clients and
bankers has been
very positive
Resetting Westpac's Wealth Strategy - March 2019

Resetting Westpac's Wealth Strategy - March 2019
FUA on Panorama by adviser type
1
($bn)
FUA on Panorama ($bn)
Advisers using Panorama (#)
Platform annual rolling net flow
2
($bn)
1 Does not include self managed FUA on platform. 2 Source Strategic Insights, All Retail, September 2018
Need ata
supporting advisers & investors
1,355
1,584
1,775
2,160
Sep-17Mar-18Sep-18Jan-19
Up 22%
0
1
2
3
4
5
6
HUB24
Netwealth
BT Panorama
0
1
2
3
4
5
6
7
Sep-17Mar-18Sep-18Jan-19Feb-19
6.7
9.4
12.4
16.0
Sep-17Mar-18Sep-18Feb-19
Salaried
Aligned
Independent
6
Platforms

ADVISER ESTABLISHED
SUPER (incl. SMSF)
EMPLOYER ESTABLISHED
SUPER
MEMBER ESTABLISHED
(DIRECT) SUPER
Superannuation – Providing choice
Super
Compelling
proposition for SMEs
and Corporates
Moving to digital distribution
~ 17k employers
~ 462k members
~ $23bn FUA
~ 484k members
~ $15bn FUA

Provided through
platform administration
services to Advisers
~ 10.5k advisers
~ 380k members
~ $87bn FUA
7
Resetting Westpac's Wealth Strategy - March 2019

Private Wealth - intensely customer focused
Resetting Westpac's Wealth Strategy - March 2019
Highlights
Brands
Private wealth loans, deposits & FUA

($bn)
Clients (#’ 000) and Brand NPS (%)
1 Professional Wealth Management, Published by the Financial Times.
•Best private bank in Australia 4 years in a
row
1
; 49 awards won since 2012
•Largest contributor to BTFG’s earnings
•Strong growth profile and fully funded
balance sheet
Private Wealth
27
28
30
30
31
45
46
48
55
64
(20)
(10)
-
10
20
30
40
50
60
70
Sep-14Sep-15Sep-16Sep-17Sep-18
ClientsBrand NPS
14
15
17
18
19
18
18
22
25
27
1.3
1.8
2.8
3.5
4.6
0
1
2
3
4
5
6
7
8
9
10
0
5
10
15
20
25
30
Sep-14Sep-15Sep-16Sep-17Sep-18
Lending
Deposits
Investment FUA (different scale)
8

Insurance: there when customers need us most
Insurance
167
229
294
359
389
792
892
973
1,068
1,277
20142015201620172018
RetailIFA
DirectCCI
Corporate superOther
Life Insurance

General Insurance

Westpac Life insurance inforce premiums ($m)
• Largest Australian-owned Life insurer in
Australia (8% share)
• Supporting customers at major life moments
• Expanding distribution to third party approved
product lists
Home & Contents Gross Written Premium ($m)
• Steady growth in Home & Contents
409
438
454
463
474
20142015201620172018
Rapid responder to
major disasters
• Allianz partnership has expanded product
and capability
• Improving digital sales
General insurance annual digital sales (#)
8,795
9,093
12,611
15,368
19,750
20142015201620172018
9
Resetting Westpac's Wealth Strategy - March 2019

Resetting Westpac's Wealth Strategy - March 2019
New structure and executive changes
Brian Hartzer
CEO Westpac
Group
Lyn Cobley
Chief Executive
Westpac
Institutional Bank
Gary Thursby
Chief Operating
Officer
David McLean
Chief Executive
New Zealand
Peter King
Chief Financial
Officer
Christine Parker
Group Executive
Human
Resources
David Stephen
Chief Risk
Officer
Change in
role/position
Structure
David Lindberg
Chief Executive
Consumer
Craig Bright
Chief Information
Officer
Rebecca Lim
Group Executive
Legal &
Secretariat
Carolyn McCann
Group Executive
Customer &
Corporate
Relations
Alastair Welsh
Acting Chief
Executive
Business
10

Financials: Changes expected to be EPS accretive
1
in 2020
Financials
Resetting Westpac's Wealth Strategy - March 2019
7
-10
-53
-38
-137
FY16FY17FY18
Cash earnings
Remediation
Non-interest income 185
Operating expenses (260)
Core earnings (75)
Ta x and other 22
Cash earnings (53)
Exit/ restructure
costs
Approximately $250m - $300m. The majority is expected in 1H19 (approximately $200m) with the remainder
split between 2H19 and FY20. Actual costs will depend on the number of Advisors transitioning. All costs will be
in cash earnings
Proceeds of sale
The proceeds of sale will depend on the size of the business that transitions to Viridian. Proceeds will be included in
cash earnings and will be spread across FY19 and FY20. Proceeds will be disclosed at relevant reporting date
FY19 income is likely to fall to ~ 25%
of FY18 due to decline in advisers
and the exit of the business. No
income expected FY20
Operating expenses
expected to fall in
FY19 with most
costs to be
eliminated in FY20
Ongoing impacts (from exit of advice and reducing operating divisions)
One-off impacts (from the agreement)
Additional savings
from divisional
restructure ~$20m pa.
(pre tax) from FY20
1 Excludes remediation costs. 2 Advice cash earnings in FY18 before remediation costs.
Advice cash earnings ($m)
Components of cash earnings
2
($m)
11

Summary
Resetting Westpac's Wealth Strategy - March 2019
•Committed to helping customers through their financial lives
•Supporting 2019 strategic priorities
1.Deal with outstanding issues
2.Momentum in customer franchise
3.Structural cost reduction
•Exiting advice and expanding referral model
•Realigning wealth and insurance activities to where they can
generate the greatest customer (and shareholder) value
•Unlocking value by simplifying the Group’s divisions and
exiting a loss making business

Summary
12