Westpac 2020 Interim Results email to shareholders

ASX Release


4 MAY 2020

Westpac 2020 Interim Results email to shareholders

Westpac Banking Corporation (“Westpac”) today provides the attached 2020 Interim
Results email to shareholders.








For further information:

David Lording Andrew Bowden
Group Head of Media Relations Head of Investor Relations
0419 683 411 T. (02) 8253 4008 (ext. 24008)
M. 0438 284 863


This document has been authorised for release by Tim Hartin, Group Company Secretary.


Level 18, 275 Kent Street
Sydney, NSW, 2000

Financial results snapshot First Half 2020 (1H20) compared to First Half 2019 (1H19)
1,2

 Statutory net profit $1,190 million, down 62%
 Cash earnings $993 million, down 70% (excluding notable items
3
, $2,278 million, down 44%)
 Impairment charge of $2,238 million, up $1,905 million mainly related to potential impacts of COVID-19
 Decision on interim dividend deferred – no dividend to be paid in June 2020
 Cash earnings per share 28 cents, down 71% (excluding notable items
3
, 64 cents, down 46%)
 Return on equity (ROE) 2.9% (excluding notable items
2
, 6.7%)
 Common equity Tier 1 (CET1) capital ratio of 10.8%
Westpac announced a reported net profit of $1,190 million for 1H20. Cash earnings, the Group’s preferred
measure of earnings, were $993 million, down $2,303 million or 70%. The result was affected by higher
impairment charges along with the AUSTRAC provision and other notable items including estimated customer
refunds, payments, associated costs and litigation. Excluding notable items, cash earnings were down 44%, with
most of the decline due to the significant increase in impairment charges this half.
Westpac Group CEO, Mr Peter King, said: “This is the most difficult result Westpac has seen in many years. It is
significantly impacted by higher impairment charges due to COVID-19, as well as notable items including the
AUSTRAC provision.”
Despite the challenging period, our balance sheet remains strong. We have maintained our capital position and
our liquidity ratios are comfortably above regulatory requirements. Customer deposits increased $19 billion over
the half, and more than funded loan growth which increased by $5 billion, lifting the deposit to loan ratio to over
75 per cent.
“In light of the changed economic outlook we have increased our provisions for expected credit losses to $5.8
billion, which includes approximately $1.6 billion of additional impairment charges predominantly related to
COVID-19 impacts,” Mr King said.
Westpac has also provisioned $900 million for a potential penalty relating to the AUSTRAC civil proceedings
brought against it on 20 November 2019.
A video interview with Mr King on today’s results can be found here.
COVID-19 impacts: capital and dividends
The most significant impact on Westpac’s performance in 1H20 was the COVID-19 crisis, including its effect on
employees, customers and the broader economy. Westpac’s coordinated approach to the crisis is focused on the
safety of its people, support for customers and helping the economy through this challenging time.
In supporting our customers, Westpac has helped consumers by enabling the deferral of payments on 105,000
Australian mortgage accounts, with a total loan value of $39 billion. Westpac has similarly supported Australian
businesses by allowing repayments on 31,000 loans to be deferred, with a total loan value of $8.2 billion.
While this is a difficult period for all, shareholders should know Westpac entered this period with a strong balance
sheet, with high levels of capital and a sound mix of funding. Our key capital ratio, the Common equity Tier 1

capital ratio was 10.8% which on an internationally comparable basis places Westpac in the top quartile of banks
globally.
Nevertheless, earnings have already been impacted by the likelihood of higher bad debts and the slowing in
economic growth is also expected to affect earnings in the period ahead.
We also acknowledge the significant fall in the value of shareholders’ investment and that not paying a dividend
in June 2020 will affect many shareholders. The decision was difficult, and the Board considered the uncertain
economic and operating conditions and how these may develop over the next six months, and also accepted
APRA’s consistent guidance on dividends.
We recognise many shareholders rely on our dividends as a source of income and fully recognise the impact
these decisions have. However, we must remain prudent at this point in time. The Board will continue to review
the dividend options over the course of this year.
Outlook
Mr King said that COVID-19 was a once-in-a-lifetime health crisis that had now become an economic crisis.
“Westpac strongly supports the range of government support packages that have been designed to assist
Australian businesses, consumers and the economy get to the other side of the pandemic. We are determined to
assist as many customers as possible to reset when the economy re-opens.
“However, Australia still faces a sharp economic contraction in 2020 with a solid rebound not expected until the
December quarter.
“Importantly, while the remainder of the year will be challenging, Westpac is well placed to continue to support
customers through this difficult time,” Mr King said.
Result details
Full details of our results, including the webcast of the briefing by our Chief Executive Officer, Peter King, and
Acting Chief Financial Officer, Gary Thursby, can be found on our Investor Centre and can be viewed live from
10am AEST today or on-demand afterwards.
Need more information
If you have any questions regarding your dividend or management of your shareholding, please contact Link
either by email: Westpac@linkmarketservices.com.au or by telephone on +61 1800 804 255.
Yours sincerely,
Westpac Investor Relations

1. Reported throughout this communication on a cash earnings basis unless otherwise stated. For an explanation of cash
earnings and reconciliation to reported results, refer to Section 1.3 of Westpac’s 2020 Interim Results announcement.
2. All comparisons are against prior corresponding period results (six months to 31 March 2019).
3. References to notable items include provisions for costs associated with AUSTRAC proceedings including a provision for a
potential penalty ($1,027 million after tax in 1H20), and estimated customer refunds, payments, associated costs and litigation
($258 million after tax in 1H20).
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