2020 Annual General Meeting – CEO’s Address

ASX Release


11 DECEMBER 2020

2020 Annual General Meeting - CEO Address

In accordance with ASX Listing Rule 3.13.3, Westpac Banking Corporation (“Westpac”) attaches
the Chief Executive Officer’s address to be delivered at Westpac’s 2020 Annual General Meeting.












For further information:

David Lording Andrew Bowden
Group Head of Media Relations Head of Investor Relations
0419 683 411 0438 284 863


This document has been authorised for release by Tim Hartin, General Manager & Company
Secretary.



Level 18, 275 Kent Street
Sydney, NSW, 2000

Westpac Banking Corporation
2020 Annual General Meeting

Sydney, Australia
Friday, 11 December 2020

Chief Executive Officer’s Address
Peter King

Thankyou Chairman and good morning shareholders.
My address today will focus on this year’s performance and our plan to restore the value of your company.
The 2020 year was one of the toughest in Westpac’s history. It started with devastating natural disasters,
closely followed by COVID-19 which led to significant health and economic impacts for individuals, the
community and many companies.
In banking, sharp declines in economic growth, lower interest rates and higher impairment charges all
impacted earnings – and we were not immune.
For the first time in 30 years, Australia was in recession.
As a major bank, our fate is linked to the economy and we worked hard to support customers, employees,
and the financial system through this time of uncertainty.
At the peak of COVID, we remained open for business with half of our workforce – or over 22,000 Australian
employees –– operating from home.
We provided significant support to the Australian economy through this period which included providing over
215,000 customers with repayment deferrals.
In addition, we’re bringing 1,000 jobs back to Australia to lift customer service and reduce our exposure to
offshore disruptions. This initiative contributes to Australia’s economic recovery.
As CEO, I’m very proud of our people and their commitment to customers. It is this commitment that gives me
confidence in our ability to meet the challenges before us.
AUSTRAC
Against this backdrop, we have confronted our own issues.
The AUSTRAC proceedings highlighted shortcomings in the management of risk at Westpac, particularly in
financial crime areas.
Over the year we have completed a number of reviews, applied consequences and started to address our
issues. Before I talk about our response and the change underway, I want to recap what happened.
In November 2019, AUSTRAC commenced civil proceedings against us and while we had self-reported some
compliance failings, the Statement of Claim highlighted new issues that were deeply disappointing.
We thoroughly investigated the matters, with independent oversight, and sought to reach agreement with
AUSTRAC to resolve the proceedings. In September 2020, an agreement was reached involving a Statement
of Agreed Facts and Admissions and a $1.3 billion civil penalty.
The statement acknowledged that our program did not fully comply with the rules. These included reporting
failures, inadequate transaction monitoring and not fully assessing the risks in some correspondent bank
relationships.
Shareholders are rightly disappointed. This simply should not have happened, and I apologise.
I also recognise that the civil penalty and the impact of COVID resulted in lower dividends and this made it
hard for many of you.
While our failings were not intentional, significant changes and consequences have occurred. This included
Board and management changes along with remuneration consequences for those in the chain of
responsibility. I and the Executive team also took collective accountability with 2020 short-term variable
rewards cancelled.

Rebuilding Westpac
The matter has been a catalyst for change at Westpac. Reaching a settlement is an important step which
allows us to direct our focus and energy towards getting things back on track.
We have clarified the businesses and countries we operate in focusing on core banking in Australia and New
Zealand. The Executive team has been renewed and we have reframed our strategy with three clear
priorities.
Our first priority is Fix. Here we are addressing our shortcomings in the management of risk, reducing
customer pain points which improves the customer experience, accelerating customer remediation, and
reducing the complexity of our systems.
Strengthening our risk culture and management of risk is critical and this was reinforced by the findings of
APRA’s year-long review into risk governance and the Enforceable Undertaking agreed last week.
We acknowledge the findings of APRA’s review – which are broadly aligned with our Culture, Governance
and Accountability reassessment released in July this year. While we have added over 400 resources to our
risk and compliance capability, we accept we need to work faster.
As part of the agreement we will deliver an integrated remediation plan with independent oversight and we will
report quarterly on our progress.
Simplify is our second priority. We are exiting some businesses and implementing a lines of business
operating model to speed up decision making, improve end-to-end accountability and ultimately enhance
performance.
As the Chairman mentioned, the Specialist Businesses division was established in April to bring together the
non-core businesses. The recent sales of General Insurance and Westpac Pacific show our progress.
Digital is a prominent feature of Simplify, helping to streamline activities and provide customers with a better
service wherever, or however they choose to bank. We are underway with customer trials of our new
Westpac banking app which speeds up the most common activities, particularly payments.
Our third priority is Perform. Here we aim to improve performance by building customer loyalty and growth
through service, sharpening our focus on returns, and resetting our cost base.
Given the environment, our priority right now is to continue supporting customers impacted by COVID and to
help them get back on their feet.
At the same time, we remain focused on balance sheet strength and improving returns on capital. Cost
management is also vitally important, and we are building our plan to reset the cost base of our slimmed
down company.
2020 performance
The 2020 financial year was clearly disappointing, with reported profit down 66%. Much of the fall was due to
our own issues, including the AUSTRAC penalty. COVID directly impacted us contributing to slower loan
growth, lower margins, higher expenses, and a material increase in impairment charges.
While earnings were lower, our balance sheet is in good shape. Capital levels are strong, and our funding and
liquidity metrics are all well above regulatory minimums. We also increased bad debt provisions by over
$2 billion which provides flexibility to support customers and deal with uncertainties in the year ahead.
We also recommitted to our sustainability agenda with an updated sustainability strategy and a new Climate
Change Position Statement released early this year. We worked with many stakeholders to balance the need
to support customers and the economy while remaining true to our commitments – such as the Paris
Agreement.

Outlook
It has been encouraging to watch the economy quickly recover as States exit their various stages of
lockdown. I’ve been particularly pleased to see many customers restart repayments. The Government’s
support has played a critical role in helping Australian families and keeping businesses afloat and we expect
the economic recovery to continue through next year.
Nevertheless, some customers will find conditions difficult. The gradual unwinding of Government support
must be offset by increased activity if we are to minimise the impacts on customers.
At the same time, we are working hard to resolve our issues and simplify the business. We are underway but
have much more to do.
As CEO, my role is to build sustainable long-term value for shareholders, and I am personally committed to
see this through.
Shareholder value is created by a strong customer franchise; strong relationships; and by being there for
customers when they need us. Right now, that means supporting customers and the economy through this
pandemic.
Before I close, I want to express my gratitude to our people who have given so much over the year, while
themselves working in a challenging environment. As I said at the beginning, I believe in our people and have
every confidence we will get Westpac back on track.
Thanks also to shareholders for your continued support and patience. I am committed to serving you.