UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

October 23, 2019

 

Commission File Number 1-10167

 

WESTPAC BANKING CORPORATION

(Translation of registrant’s name into English)

 

275 KENT STREET, SYDNEY, NEW SOUTH WALES 2000, AUSTRALIA

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports

under cover of Form 20-F or Form 40-F.

 

Form 20-F   x               Form 40-F   o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

 

 


 

Incorporation by Reference

 

The information contained in this Report on Form 6-K, excluding the information set forth in Exhibit No. 1, shall be incorporated by reference in the prospectuses relating to the Registrant’s securities contained in the Registrant’s Registration Statements on Form F-3 (File Nos. 333-228295, 333-228294 and 333-220373), as such prospectuses may be amended or supplemented from time to time.

 

Customer remediation programs

 

The Westpac Group has today announced that its net profit attributable to owners of Westpac in Second Half 2019 will be reduced by an estimated $341 million due to its customer remediation programs.(1)

 

Total 2019 notable items (after tax)

 

In aggregate customer remediation programs and costs related to the previously announced wealth reset will reduce net profit attributable to owners of Westpac by $377 million in Second Half 2019.  Together these items are called “notable items”.  The table below summarizes the notable items by major items over FY19.

 

$ million

 

1H19

 

2H19

 

FY19

 

Customer remediation

 

617

 

341

 

958

 

Wealth reset

 

136

 

36

 

172

 

Total notable items

 

753

 

377

 

1,130

 

 

Line item impacts by division of 2H19 notable items are provided in Appendix 1.

 


(1)  Customer remediation programs refers to provisions for estimated customer refunds and payments, associated costs, and litigation. Each remediation program has its own methodology. These methodologies and estimates may change over time as further facts emerge and may require additional provisions.

 

2


 

Second Half 2019 Customer Remediation Program estimates

 

Of the $341 million impact on net profit attributable to owners of Westpac in Second Half 2019, approximately 72% relates to customer payments (including interest) while the rest relates to costs associated with running these remediation programs. The majority of amounts relate to issues identified in prior periods. The larger items over the half related to:

 

·      Provisions associated with financial advice.  The majority of new provisions are related to ongoing advice service fees and changes in how the time value of money is calculated including extending the forecast timing over which payments are likely to be made. The current estimated provision associated with authorised representatives now represents 32%(2) of the ongoing advice service fees collected over the period. For salaried planners the estimated percentage is 26%(2); and

 

·      In Business, provisions associated with interest only loans that did not automatically switch, when required, to principal and interest loans.

 

The table below summarizes the notable items related to customer remediation programs in Second Half 2019 by division.

 

Division ($ million)

 

Customer
refunds

 

Program
costs

 

Total

 

Net profit
attributable
to owners
of Westpac
impact

 

Group Businesses (Advice related)

 

191

 

48

 

239

 

168

 

Business

 

104

 

67

 

171

 

119

 

Consumer

 

40

 

6

 

46

 

31

 

New Zealand ($A)

 

17

 

15

 

32

 

23

 

Total

 

352

 

136

 

488

 

341

 

 

Further details on these notable items will be provided in Westpac’s 2019 Annual Report on Form 20-F.  Costs associated with the wealth reset are not in the above table and are included within Group Businesses.

 


(2)  These calculations exclude interest costs and any project related costs.

 

3


 

Contingent liability update

 

As Westpac has not taken a provision for the IFTI matter, which was reported as a significant development and contingent liability in the Group’s 2018 Financial Statements and its 2019 Interim Financial Results Announcement, the Group is providing a further update on this matter.

 

The contingent liability disclosed last year relates to a failure to report a large number of International Funds Transfer Instructions (IFTIs) (as required under Australia’s AML/CTF Act), which Westpac self-reported to AUSTRAC. Under the Act, the ‘sender’ financial institution of an IFTI transmitted out of Australia, or the ‘recipient’ financial institution of an IFTI transmitted into Australia, is required to report the IFTI to AUSTRAC within 10 business days of the instruction being sent or received.

 

The majority of the IFTIs which are the subject of the Group’s engagement with AUSTRAC, concern batch instructions received by Westpac through one institutional bank product between 2009 and 2018 from a small number of correspondent banks for payments made predominantly to beneficiaries living in Australia in Australian dollars, on behalf of clients of those correspondent banks. The majority of the payments were low value, recurring and made by foreign government pension funds and corporates.

 

AUSTRAC has issued a number of detailed statutory notices over the last year requiring information relating to the Group’s processes, procedures and oversight. These notices relate to a range of matters including these IFTI reporting failures and associated potential failings related to record keeping and obligations to obtain and pass on certain data in funds transfer instructions, as well as correspondent banking due diligence, risk assessments and transaction monitoring. Westpac has not yet received an indication from AUSTRAC about the nature of any enforcement action it may take. The Group is continuing to work with AUSTRAC in relation to these matters.

 

Any enforcement action against Westpac may include civil penalty proceedings and result in the payment of a significant financial penalty, which Westpac is currently unable to reliably estimate. Previous enforcement action by AUSTRAC against other institutions has resulted in a range of outcomes, depending on the nature and severity of the relevant conduct and its consequences.

 

Updated significant developments, contingent liabilities and associated risk factors will be included in Westpac’s 2019 Annual Report on Form 20-F.

 

4


 

Index to Exhibits

 

Exhibit
No.

 

Description

 

 

 

1

 

ASX Release — Westpac details 2H19 notable items and releases its 2019 Full Year Financial Results Template

 

Disclosure regarding forward-looking statements

 

The information contained in this Report on Form 6-K contains statements that constitute “forward-looking statements” within the meaning of section 21E of the U.S. 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 Report 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.

 

We use words such as ‘will’, ‘may’, ‘expect’, ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘estimate’, ‘anticipate’, ‘believe’, ‘probability’, ‘risk’, ‘aim’ or other 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.  Should one or more of the risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could differ materially from the expectations described in this Report.  Factors that may impact on the forward-looking statements made include, but are not limited to, those described in the section entitled ‘Risk factors’ in Westpac’s 2019 Interim Financial Results on Form 6-K filed with the U.S. Securities and Exchange Commission.  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, and do not intend, to update any forward-looking statements contained in this Report, whether as a result of new information, future events or otherwise, after the date of this Report.

 

5


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

WESTPAC BANKING CORPORATION

 

(Registrant)

 

 

 

 

Date:   October 23, 2019

By:

/s/ Yvette Adiguzel

 

 

Yvette Adiguzel

 

 

Tier 1 Attorney

 

6


Exhibit 1

 

ASX Release 23 October 2019 Westpac details 2H19 notable items and releases its 2019 Full Year Financial Results Template Customer remediation programs The Westpac Group has today announced that its cash earnings1 in Second Half 2019 will be reduced by an estimated $341 million due to its customer remediation programs.2 Westpac CEO Mr Brian Hartzer said: “A key priority in 2019 has been to deal with outstanding remediation issues and refund customers as quickly as possible. The additional provisions announced today are part of that commitment. “As part of our ‘get it right put it right’ initiative we are determined to fix these issues and stop these errors occurring. We will continue to review our products and services to ensure they deliver the right outcomes for customers, and if necessary, make further provisions.” Total 2019 notable items (after tax) In aggregate customer remediation programs and costs related to the previously announced wealth reset will reduce earnings by $377 million in Second Half 2019. Together these items are called “notable items”. The table below summarises the notable items by major items over FY19. Line item impacts by division of 2H19 notable items are provided in Appendix 1. 1 Cash earnings is reported net profit adjusted for certain items to ensure they appropriately reflect profits available to ordinary shareholders. For further details please see page 41 of Westpac’s 2019 Interim Presentation and Investor Discussion Pack. 2 Customer remediation programs refers to provisions for estimated customer refunds and payments, associated costs, and litigation. Each remediation program has its own methodology. These methodologies and estimates may change over time as further facts emerge and may require additional provisions. $ million 1H19 2H19 FY19 Customer remediation 617 341 958 Wealth reset 136 36 172 Total notable items 753 377 1,130

 

Second Half 2019 Customer Remediation Program estimates Of the $341 million impact on cash earnings in Second Half 2019, approximately 72% relates to customer payments (including interest) while the rest relates to costs associated with running these remediation programs. The majority of amounts relate to issues identified in prior periods. The larger items over the half related to: • Provisions associated with financial advice. The majority of new provisions are related to ongoing advice service fees and changes in how the time value of money is calculated including extending the forecast timing over which payments are likely to be made. The current estimated provision associated with authorised representatives now represents 32%3 of the ongoing advice service fees collected over the period. For salaried planners the estimated percentage is 26%3, and In Business, provisions associated with interest only loans that did not automatically switch, when required, to principal and interest loans. • The table below summarises the notable items related to customer remediation programs in Second Half 2019 by division. earnings Further details on these notable items will be provided in Westpac’s 2019 Full Year results announcement. Costs associated with the wealth reset are not in the above table and are included within Group Businesses. 3 These calculations exclude interest costs and any project related costs. Division ($ million) Customer refunds Program costs Total Cash impact Group Businesses (Advice related) 191 48 239 168 Business 104 67 171 119 Consumer 40 6 46 31 New Zealand ($A) 17 15 32 23 Total 352 136 488 341

 

Contingent liability update As Westpac has not taken a provision for the IFTI matter, which was reported as a significant development and contingent liability in the Group's 2018 Financial Statements and its 2019 Interim Financial Results Announcement, the Group is providing a further update on this matter. The contingent liability disclosed last year relates to a failure to report a large number of International Funds Transfer Instructions (IFTIs) (as required under Australia’s AML/CTF Act), which Westpac self-reported to AUSTRAC. Under the Act, the 'sender' financial institution of an IFTI transmitted out of Australia, or the 'recipient' financial institution of an IFTI transmitted into Australia, is required to report the IFTI to AUSTRAC within 10 business days of the instruction being sent or received. The majority of the IFTIs which are the subject of the Group’s engagement with AUSTRAC, concern batch instructions received by Westpac through one institutional bank product between 2009 and 2018 from a small number of correspondent banks for payments made predominantly to beneficiaries living in Australia in Australian dollars, on behalf of clients of those correspondent banks. The majority of the payments were low value, recurring and made by foreign government pension funds and corporates. AUSTRAC has issued a number of detailed statutory notices over the last year requiring information relating to the Group’s processes, procedures and oversight. These notices relate to a range of matters including these IFTI reporting failures and associated potential failings related to record keeping and obligations to obtain and pass on certain data in funds transfer instructions, as well as correspondent banking due diligence, risk assessments and transaction monitoring. Westpac has not yet received an indication from AUSTRAC about the nature of any enforcement action it may take. The Group is continuing to work with AUSTRAC in relation to these matters. Any enforcement action against Westpac may include civil penalty proceedings and result in the payment of a significant financial penalty, which Westpac is currently unable to reliably estimate. Previous enforcement action by AUSTRAC against other institutions has resulted in a range of outcomes, depending on the nature and severity of the relevant conduct and its consequences. Updated significant developments, contingent liabilities and associated risk factors will be included in Westpac’s 2019 Annual Report.

 

2019 Full Year Financial Results Template Westpac Group has released the template for its 2019 Full Year Financial Results. The Excel template outlines the changes that are expected to be made in the presentation of Westpac’s 2019 Full Year Financial Results and details how key information will be presented (including providing updated comparative data). The template is available on Westpac’s website at www.westpac.com.au/investorcentre. The primary change relates to Westpac’s decision to reset its wealth business from 1 April 2019. Under this change, Westpac exited the provision of personal financial advice by salaried financial advisers and authorised representatives and announced that BT Financial Group will no longer operate as a separate division. As a result, Westpac now has four primary operating divisions (down from five) while businesses previously in BT Financial Group have been realigned as follows: • Insurance operations, including Life, General and Lenders Mortgage Insurance have been moved into an expanded Consumer division; Superannuation, Investments, Platforms and Private Wealth businesses have been moved into an expanded Business division; and The Advice operations, which were wound down during the year, were moved to Group Businesses. • • These changes have no impact on the Group’s cash earnings, reported net profit or total assets/liabilities in prior periods but do impact divisional earnings, balance sheets, and performance and credit quality metrics. In addition, in Westpac’s 2019 Interim Financial Result, various changes to financial statements were introduced following the adoption of new accounting standards. At that time proforma cash earnings for 1H18 and 2H18 were provided. This template provides comparatives for FY18. Appendix 2 provides tables showing selected updated disclosures. The Westpac Group is scheduled to announce its 2019 Full Year Financial Results on Monday, 4 November 2019. An Excel spreadsheet of the 2019 Full Year Financial Results will also be published on the Westpac website on that date. Ends. For Further Information David Lording Head of Media Relations Andrew Bowden Head of Investor Relations T. 02 8253 4008 M. 0438 284 863 M. 0419 683 411

 

Appendix 1 Summary of 2H19 notable items by line item by division Group Businesses (advice and wealth reset related) Business Consumer New Zealand (in $A) Total Net interest income - 81 38 13 132 Net fee income 89 23 2 4 118 Net wealth management & insurance income 102 - - - 102 Non-interest income 191 23 2 4 220 Staff expenses 46 6 1 7 60 Occupancy expenses - - - - - Technology expenses 15 - - - 15 Other expenses 38 61 5 8 112 Operating expenses 99 67 6 15 187 Core earnings 290 171 46 32 539 Income tax expense (86) (52) (15) (9) (162) Cash earnings 204 119 31 23 377

 

Appendix 2 2019 Full Year Financial Results Template

 

1.1 Reported results $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19 Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Net interest income Net fee income Net wealth management and insurance income Trading income Other income Net operating income before operating expenses and impairment charges Operating expenses Net profit before impairment charges and income tax expense Impairment charges Profit before income tax Income tax expense Net profit for the period Net profit attributable to non-controlling interests Net profit attributable to owners of Westpac Banking Corporation 8,263 826 326 437 127 16,505 2,424 2,061 945 72 9,979 (5,091) 22,007 (9,566) 4,888 (333) 12,441 (710) 4,555 (1,379) 11,731 (3,632) 3,176 (3) 8,099 (4) 3,173 8,095

 

1.2 Key financial information Half Year Sept 19 % Mov't Half Year Sept 19 - March 19 Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18 Sept 18 Shareholder value Earnings per ordinary share (cents) Weighted average ordinary shares (millions) Fully franked dividends per ordinary share (cents) Return on average ordinary equity Average ordinary equity ($m) Average total equity ($m) Net tangible asset per ordinary share ($) Business performance Interest spread Benefit of net non-interest bearing assets, liabilities and equity Net interest margin Average interest-earning assets ($m) Expense to income ratio Capital, funding and liquidity Common equity Tier 1 capital ratio - APRA Basel III - Internationally comparable Credit risk weighted assets (credit RWA) ($m) Total risk weighted assets (RWA) ($m) Liquidity coverage ratio (LCR) Net stable funding ratio (NSFR) Asset quality Gross impaired exposures to gross loans Gross impaired exposures to equity and total provisions Gross impaired exposures provisions to gross impaired assets Total committed exposures (TCE) ($bn) Total stressed exposures as a % of TCE Total loan provisions to gross loans Mortgage 90+ day delinquencies Other consumer loans 90+ day delinquencies Collectively assessed provisions to credit RWA Balance sheet ($m) Loans Total assets Deposits and other borrowings Total liabilities Total equity Wealth Management Average Group Funds ($bn) Life insurance in-force premiums (Australia) ($m) General insurance gross written premiums (Australia) ($m) 92.3 3,436 94 10.05% 63,348 63,400 15.12 1.89% 0.20% 2.09% 794,660 51.02% 10.64% 16.17% 362,762 419,819 138% 113% 0.24% 2.57% 45.74% 1,047 1.10% 56bps 0.75% 1.80% 98bps 714,297 891,062 555,007 827,127 63,935 207.3 1,259 259 237.5 3,406 188 13.05% 62,017 62,048 15.39 1.95% 0.18% 2.13% 774,944 43.47% 10.63% 16.14% 362,749 425,384 133% 114% 0.20% 2.09% 46.12% 1,038 1.08% 43bps 0.67% 1.64% 73bps 709,690 879,592 559,285 815,019 64,573 217.3 1,277 503

 

1.3 Cash earnings results 1.3.1 Key financial information - cash earnings basis $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19 Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Shareholder value Cash earnings per ordinary share (cents) Economic profit ($m) Weighted average ordinary shares (millions) Dividend payout ratio Cash earnings on average ordinary equity (ROE) Cash earnings on average tangible ordinary equity (ROTE) Average ordinary equity ($m) Average tangible ordinary equity ($m) Business performance Interest spread Benefit of net non-interest bearing assets, liabilities and equity Net interest margin Average interest-earning assets ($m) Expense to income ratio Full time equivalent employees (FTE) Revenue per FTE ($ '000's) Effective tax rate Impairment charges Impairment charges to average loans annualised Net write-offs to average loans annualised 95.8 660 3,442 98.33% 10.43% 12.30% 63,348 53,748 1.92% 0.20% 2.12% 794,660 49.90% 34,241 294 30.24% 9bps 12bps 236.2 3,444 3,414 79.94% 13.00% 15.41% 62,017 52,338 2.04% 0.18% 2.22% 774,944 43.75% 35,029 626 30.77% 12bps 14bps $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19 Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment charges Operating profit before income tax Income tax expense Net profit Net profit attributable to non-controlling interests Cash earnings 8,389 1,714 17,187 4,978 10,103 (5,041) 22,165 (9,698) 5,062 (333) 12,467 (812) 4,729 (1,430) 11,655 (3,586) 3,299 (3) 8,069 (4) 3,296 8,065 Add back notable items Cash earnings excluding notable items 753 281 4,049 8,346

 

1.3.2 Impact of notable Items $m Full Year Sept 19 Full Year Sept 18 Estimated customer refunds, associated costs, and Wealth litigation restructuring Total Estimated customer refunds, associated costs, and Wealth litigation restructuring Total Net interest income Net fee income Net wealth management and insurance income Non-interest income Net operating income Staff expenses Technology expenses Other expenses Operating expenses Operating profit before tax Income tax expense Cash earnings (105) - (105) (157) - (157) (6) - (6) (163) - (163) (268) - (268) (37) - (37) - - - (75) - (75) (112) - (112) (380) - (380) 99 - 99 (281) - (281) $m Half Year Sept 19 Half Year March 19 Estimated customer refunds, associated costs, and Wealth litigation restructuring Total Estimated customer refunds, associated costs, and Wealth litigation restructuring Total Net interest income Net fee income Net wealth management and insurance income Non-interest income Net operating income Staff expenses Technology expenses Other expenses Operating expenses Operating profit before tax Income tax expense Cash earnings (212) - (212) (165) - (165) (435) - (435) (600) - (600) (812) - (812) (66) (142) (208) (9) (11) (20) (9) (37) (46) (84) (190) (274) (896) (190) (1,086) 279 54 333 (617) (136) (753)

 

2.0 Divisional Cash Earnings Summary Mov't Sept 19 - Mar 19 Westpac Westpac Institutional New ZealandGroup % Consumer Business Bank (A$) Businesses Group Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment (charges) / benefits Operating profit before income tax Income tax expense Net profit Non-controlling interests Cash earnings Add back notable items Cash earnings excluding notable items Half Year March 19 Westpac Westpac Institutional New ZealandGroup $m Consumer Business Bank (A$) Businesses Group Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment (charges) / benefits Operating profit before income tax Income tax expense Net profit Non-controlling interests Cash earnings 3,883 2,519 743 945 299 556 744 682 234 (502) 8,389 1,714 4,439 3,263 1,425 1,179 (203) (1,886) (1,375) (653) (453) (674) 10,103 (5,041) 2,553 1,888 772 726 (877) (268) (74) (15) (14) 38 5,062 (333) 2,285 1,814 757 712 (839) (678) (547) (210) (188) 193 4,729 (1,430) 1,607 1,267 547 524 (646) - - (3) - - 3,299 (3) 1,607 1,267 544 524 (646) 3,296 Add back notable items Cash earnings excluding notable items 2 151 - - 600 753 1,609 1,418 544 524 (46) 4,049 Half Year Sept 19 Westpac Westpac Institutional New ZealandGroup $m Consumer Business Bank (A$) Businesses Group Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment (charges) / benefits Operating profit before income tax Income tax expense Net profit Non-controlling interests Cash earnings Add back notable items Cash earnings excluding notable items

 

2.0 Divisional Cash Earnings Summary Mov't Sept 19 - Sept 18 Westpac Westpac Institutional New ZealandGroup % Consumer Business Bank (A$) Businesses Group Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment (charges) / benefits Operating profit before income tax Income tax expense Net profit Non-controlling interests Cash earnings Add back notable items Cash earnings excluding notable items Full Year Sept 18 Westpac Westpac Institutional New ZealandGroup $m Consumer Business Bank (A$) Businesses Group Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment (charges) / benefits Operating profit before income tax Income tax expense Net profit Non-controlling interests Cash earnings 7,850 5,284 1,442 1,799 812 1,311 1,640 1,565 373 89 17,187 4,978 9,161 6,924 3,007 2,172 901 (3,774) (2,651) (1,449) (855) (969) 22,165 (9,698) 5,387 4,273 1,558 1,317 (68) (486) (321) 16 (22) 1 12,467 (812) 4,901 3,952 1,574 1,295 (67) (1,478) (1,196) (476) (361) (75) 11,655 (3,586) 3,423 2,756 1,098 934 (142) - - (5) - 1 8,069 (4) 3,423 2,756 1,093 934 (141) 8,065 Add back notable items Cash earnings excluding notable items 114 5 - 12 150 281 3,537 2,761 1,093 946 9 8,346 Full Year Sept 19 Westpac Westpac Institutional New ZealandGroup $m Consumer Business Bank (A$) Businesses Group Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment (charges) / benefits Operating profit before income tax Income tax expense Net profit Non-controlling interests Cash earnings Add back notable items Cash earnings excluding notable items

 

2.2.6 Group funds Half Year Sept 19 % Mov't Half Year Sept 19 - Mar 19 Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18 Sept 18 Average funds for the Group (excluding Westpac Institutional Bank) Westpac Institutional Bank Average funds for the Group 207.3 - 214.9 2.4 207.3 217.3 $bn As at 30 Sept 2019 As at % Mov't As at % Mov't Net Other 30 Sept Sept 19 - 31 March Sept 19 - Inflows Outflows flows Mov't 2018 Sept 18 2019 Mar 19 Superannuation Platforms Packaged Funds Other Total Australia funds Total NZ funds (A$) Total funds Total NZ funds (NZ$) 39.3 38.9 122.9 120.8 39.6 39.8 3.8 3.6 205.6 203.1 9.8 10.4 215.4 213.5 10.7 10.9

 

2.4.1 Balance Sheet $m As at 30 Sept 2019 As at As at % Mov't % Mov't 31 March 30 Sept Sept 19 - Sept 19 - 2019 2018 Mar-19 Sep-18 Assets Cash and balances with central banks Collateral paid Trading securities and financial assets measured at fair value through income statement (FVIS), available-for-sale securities and investment securities Derivative financial instruments Loans Life insurance assets Other assets Total assets Liabilities Collateral received Deposits and other borrowings Other financial liabilities Derivative financial instruments Debt issues Life insurance liabilities Loan capital Other liabilities Total liabilities Equity Total equity attributable to owners of Westpac Banking Corporation Non-controlling interests Total equity 19,486 26,788 6,103 4,787 97,843 84,251 21,765 24,101 714,297 709,690 9,374 9,450 22,194 20,525 891,062 879,592 1,889 2,184 555,007 559,285 29,013 28,105 23,384 24,407 188,759 172,596 7,503 7,597 16,736 17,265 4,836 3,580 827,127 815,019 63,884 64,521 51 52 63,935 64,573

 

3.0 Notable items Full Year 2018WestpacWestpac Institutional New ZealandGroup $mConsumerBusinessBank(A$)Businesses Group Net interest income Non-interest income Operating expenses Core earnings Tax and non-controlling interests Cash earnings (99) - - (2) (4) (12) - - (11) (140) (39) (5) - (3) (65) (105) (163) (112) (150)(5)-(16)(209) 36--459 (380) 99 (114)(5)-(12)(150) (281) Full Year 2019WestpacWestpac Institutional New ZealandGroup $mConsumerBusinessBank(A$)Businesses Group Net interest income Non-interest income Operating expenses Core earnings Tax and non-controlling interests Cash earnings Half Year March 19WestpacWestpac Institutional New ZealandGroup $mConsumerBusinessBank(A$)Businesses Group Net interest income Non-interest income Operating expenses Core earnings Tax and non-controlling interests Cash earnings (47)(165)----(32)--(568) 31(20)--(285) (212) (600) (274) (16)(217)--(853) 1466--253 (1,086) 333 (2)(151)--(600) (753) Half Year Sept 19WestpacWestpac Institutional New ZealandGroup $mConsumerBusinessBank(A$)Businesses Group Net interest income Non-interest income Operating expenses Core earnings Tax and non-controlling interests Cash earnings

 

3.1 Consumer Cash earnings (ex notable items) Insurance key metrics Half Year Sept 19 % Mov't Half Year Sept 19 - March 19 Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18 Sept 18 Life Insurance in-force premiums ($m) Life Insurance in-force premiums at start of period Sales / New Business Lapses Life Insurance in-force premiums at end of period Claims ratios for Insurance Business (%) Life Insurance General Insurance Lenders Mortgage Insurance Gross written premiums ($m) General Insurance gross written premium Lenders Mortgage Insurance gross written premium 1,277 55 (73) 1,068 363 (154) 1,259 1,277 48 81 25 43 46 16 259 76 503 180 $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19 Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18 Sept 18 Banking Insurance - Life Insurance Insurance - General Insurance Insurance - Lenders Mortgage Insurance Capital and Other Total Insurance (including Capital and Other) Total cash earnings (ex notable items) 1,512 3,230 77 - 10 10 146 109 27 25 97 307 1,609 3,537 As at 30 Sept 2019 As at As at As at 31 March 30 Sept 31 March 2019 2018 2018 Credit quality Loan impairment charges to average loans annualised Mortgage 90+ day delinquencies Other consumer loans 90+ day delinquencies Total stressed assets to TCE 0.14% 0.12% 0.13% 0.84% 0.74% 0.72% 1.66% 1.50% 1.61% 0.74% 0.65% 0.64% $bn As at 30 Sept 2019 As at % Mov't 31 March Sept 19 - 2019 Mar-19 As at 30 Sept 2019 As at % Mov't 30 Sept Sept 19 - 2018 Sep-18 Deposits Term deposits Other Total customer deposits Net loans Mortgages Other Provisions Total net loans Deposit to loan ratio Total assets TCE Average interest-earning assets 65.3 140.5 63.9 142.3 205.8 375.4 13.2 (1.5) 206.2 373.0 13.3 (0.9) 387.1 385.4 53.16% 53.50% 397.7 454.3 353.2 395.6 452.7 346.4 $m Half Year Sep-19 % Mov't Half Year Sept 19 - March 19 Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18 Sept 18 Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment charges Operating profit before income tax Tax and non-controlling interests Cash earnings Add back notable items Cash earnings excluding notable items Economic profit Expense to income ratio Net interest margin 3,883 556 7,850 1,311 4,439 (1,886) 9,161 (3,774) 2,553 (268) 5,387 (486) 2,285 (678) 4,901 (1,478) 1,607 3,423 2 114 1,609 3,537 953 42.49% 2.20% 2,248 41.20% 2.27%

 

3.2 Business As at 30 Sept 2019 As atAs atAs at 31 March30 Sept 31 March 201920182018 Credit quality Loan impairment charges to average loans annualised Mortgage 90+ day delinquencies Other consumer loans 90+ day delinquencies Business: impaired assets to TCE Total stressed assets to TCE 0.09%0.19%0.18% 0.73%0.64%0.58% 2.18%2.09%1.87% 0.59%0.57%0.54% 2.43%2.48%2.31% $bn As at 2019 Sept 19 As at% Mov't 31 March Sept 19 - 2019Mar-19 As at 30 Sept 2019 As at% Mov't 30 SeptSept 19 - 2018Sep-18 Deposits Term deposits Other Total deposits Net loans Mortgages Business Other Provisions Total net loans Deposit to loan ratio Total assets TCE Average interest-earning assets Total funds Average funds 64.2 78.4 64.6 79.2 142.6 72.1 91.7 9.9 (1.4) 143.8 72.1 92.4 10.3 (1.2) 172.3 173.6 82.76% 82.83% 186.6 188.2 218.4 166.4 203.1 197.3 219.9 165.9 205.6 201.7 Cash earnings excluding notable items $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Banking Super, Investments, Platforms and Private Wealth Total cash earnings excluding notable items 1,135 283 2,162 599 1,418 2,761 $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment charges Operating profit before tax Tax and non-controlling interests Cash earnings Add back notable items Cash earnings excluding notable items Economic profit Expense to income ratio Net interest margin 2,519 744 5,284 1,640 3,263 (1,375) 6,924 (2,651) 1,888 (74) 4,273 (321) 1,814 (547) 3,952 (1,196) 1,267 2,756 151 5 1,418 2,761 892 42.14% 3.04% 2,038 38.29% 3.18%

 

3.3 Westpac Institutional Bank Revenue contribution $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Lending and deposit revenue Markets, sales and fee income Total customer revenue Derivative valuation adjustments Trading revenue Hastings Other Total WIB revenue 848 458 1,669 890 1,306 2,559 (11) 126 - 4 14 221 203 10 1,425 3,007 $bn As at 30 Sept 2019 As at% Mov't 31 March Sept 19 - 2019Mar-19 As at 30 Sept 2019 As at% Mov't 30 SeptSept 19 - 2018Sep-18 Deposits Net loans Loans Provisions Total net loans Deposit to loan ratio Total assets TCE Average interest-earning assets Loan impairment charges / (benefits) to average loans annualised Impaired assets to TCE Total stressed assets to TCE 95.7 76.7 (0.2) 104.9 77.7 (0.3) 76.5 77.4 125.10% 135.53% 99.8 176.4 89.1 0.04% 0.08% 0.63% 102.5 173.2 86.3 (0.02%) 0.03% 0.66% $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment (charges) / benefits Operating profit before tax Tax and non-controlling interests Cash earnings Economic profit Expense to income ratio Net interest margin 743 682 1,442 1,565 1,425 (653) 3,007 (1,449) 772 (15) 1,558 16 757 (213) 1,574 (481) 544 1,093 254 45.82% 1.67% 487 48.19% 1.67%

 

3.4 Westpac New Zealand As at 30 Sept 2019 As atAs atAs at 31 March30 Sept 31 March 201920182018 Credit quality Loan impairment charges/(benefits) to average loans annualised Mortgage 90+ day delinquncies Other consumer loans 90+ day delinquncies Impaired assets to TCE Total stressed assets to TCE 0.03%(0.03%)0.10% 0.14%0.11%0.16% 1.02%0.62%0.86% 0.13%0.15%0.21% 1.57%1.57%1.86% NZ$bn As at 30 Sept 2019 As at% Mov't 31 March Sept 19 - 2019Mar-19 As at 30 Sept 2019 As at% Mov't 30 SeptSept 19 - 2018Sep-18 Deposits Term deposits Other Total customer deposits Net loans Mortgages Business Other Provisions Total net loans Deposit to loan ratio Total assets TCE Third party liquid assets Average interest earning assets Total funds 33.3 30.9 32.6 29.3 64.2 49.6 30.9 2.0 (0.4) 61.9 48.9 29.8 2.0 (0.3) 82.1 80.4 78.20% 76.99% 93.4 90.0 113.9 9.1 89.9 10.9 112.0 7.5 87.2 10.7 NZ$m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Net interest income Non-interest income Net operating revenue Operating expenses Core earnings Impairment (charges) / benefits Operating profit before tax Tax and non-controlling interests Cash earnings Add back notable items Cash earnings excluding notable items Economic profit Expense to income ratio Net interest margin 1,000 248 1,958 406 1,248 (480) 2,364 (930) 768 (14) 1,434 (25) 754 (199) 1,409 (393) 555 1,016 - 13 555 1,029 249 38.46% 2.23% 459 39.34% 2.24%

 

3.5 Group Businesses Treasury Value at Risk (VaR) $m Average High Low Six months ended 31 March 2019 Six months ended 30 September 2018 26.8 29.3 33.6 32.6 20.9 25.6 Advice business that has been exited $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Net operating income Operating expenses Cash earnings excluding notable items 51 (93) 185 (260) (29) (53) Six months ended 30 September 2019 Treasury $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Net interest income Non-interest income Net operating income Cash earnings 239 (4) 737 10 235 143 747 480 $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment (charges) / benefits Operating profit before tax Tax and non-controlling interests Cash earnings Add back notable items Wealth restructuring Provisions for customer refunds, payments, associated costs, and litigation Cash earnings excluding notable items 299 (502) 812 89 (203) (674) 901 (969) (877) 38 (68) 1 (839) 193 (67) (74) (646) (141) 136 464 - 150 (46) 9

 

Note 1. Interest spread and margin analysis (cash earnings basis) Half Year Sept 19 Half Year March 19 Full Year Sept 19 Full Year Sept 18 Group Average interest-earning assets ($m) Net interest income ($m) Interest spread Benefit of net non-interest bearing assets, liabilities and equity Net interest margin Analysis by division Average interest-earning assets ($m) Consumer Business Westpac Institutional Bank Westpac New Zealand (A$) Group Businesses Group total Westpac New Zealand (NZ$) Net interest income ($m) Consumer Business Westpac Institutional Bank Westpac New Zealand (A$) Group Businesses Group total Westpac New Zealand (NZ$) Interest margin Consumer Business Westpac Institutional Bank Westpac New Zealand (NZ$) Group Businesses Group total 794,660 8,389 1.92% 0.20% 2.12% 353,246 166,435 89,116 85,038 100,825 774,944 17,187 2.04% 0.18% 2.22% 346,358 165,920 86,315 80,159 96,192 794,660 774,944 89,946 3,883 2,519 743 945 299 87,223 7,850 5,284 1,442 1,799 812 8,389 17,187 1,000 2.20% 3.04% 1.67% 2.23% 0.59% 1,958 2.27% 3.18% 1.67% 2.24% 0.84% 2.12% 2.22%

 

Note 2. Average balance sheet and interest rates (cash earnings basis) Half Year 30 September 2019 Half Year 31 March 2019 AverageInterestAverage balanceRate $m$m% AverageInterestAverage balanceRate $m$m% Assets Interest earning assets Collateral paid Trading securities and other financial assets designated at fair value Available-for-sale securities Investment securities Loans and other receivables Total interest earning assets and interest income Non-interest earning assets Derivative financial instruments Life insurance assets All other assets Total non-interest earning assets Total assets Liabilities Interest bearing liabilities Collateral received Deposits and other borrowings Loan capital Other interest bearing liabilities Total interest bearing liabilities and interest expense Non-interest bearing liabilities Deposits and other borrowings Derivative financial instruments Life insurance policy liabilities All other liabilities Total non-interest bearing liabilities Total liabilities Shareholders' equity Non-controlling interests Total equity Total liabilities and equity Loans and other receivables Australia New Zealand Other overseas Deposits and other borrowings Australia New Zealand Other overseas 10,2751022.0 27,9683342.4 ---60,3059583.2 696,11215,5674.5 794,66016,9614.3 24,090 9,192 59,212 92,494 887,154 2,378201.7 505,4594,6751.9 17,9423864.3 203,6003,4913.4 729,3798,5722.4 48,772 25,556 7,286 12,761 94,375 823,754 63,348 52 63,400 887,154 589,84913,2674.5 78,4321,8514.7 27,8314493.2 424,7153,6981.7 54,4006342.3 26,3443432.6

 

Note 2. Average balance sheet and interest rates (cash earnings basis) Full Year 30 September 2019 Full Year 30 September 2018 AverageInterestAverage balanceRate $m$m% AverageInterestAverage balanceRate $m$m% Assets Interest earning assets Collateral paid Trading securities and other financial assets designated at fair value Available-for-sale securities Investment securities Loans and other receivables Total interest earning assets and interest income Non-interest earning assets Derivative financial instruments Life insurance assets All other assets Total non-interest earning assets Total assets Liabilities Interest bearing liabilities Collateral received Deposits and other borrowings Loan capital Other interest bearing liabilities Total interest bearing liabilities and interest expense Non-interest bearing liabilities Deposits and other borrowings Derivative financial instruments Life insurance policy liabilities All other liabilities Total non-interest bearing liabilities Total liabilities Shareholders' equity Non-controlling interests Total equity Total liabilities and equity Loans and other receivables Australia New Zealand Other overseas Deposits and other borrowings Australia New Zealand Other overseas 8,0851291.6 24,1185642.3 61,5401,9143.1 ---681,20130,8304.5 774,94433,4374.3 26,443--10,664--61,259--98,366--873,310--2,909451.5 499,9739,0211.8 17,9977744.3 194,6306,4103.3 715,50916,2502.3 47,177--26,218--8,874--13,484--95,753--811,262--62,017--31--62,048--873,310--578,67926,4884.6 73,9023,5914.9 28,6207512.6 422,0067,3081.7 51,3681,1962.3 26,5995171.9

 

Note 3. Net interest income (cash earnings basis) $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Interest income Cash and balances with central banks Collateral paid Net ineffectiveness of qualifying hedges Trading securities and financial assets measured at FVIS Available-for-sale securities Investment securities Loans Other interest income Total interest income Interest expense Collateral received Deposits and other borrowings Trading liabilities Debt issues Loan capital Bank Levy Other interest expense Total interest expense Total net interest income 193 102 - 334 - 958 15,359 15 326 129 - 564 1,914 - 30,469 35 16,961 33,437 (20) (4,675) (755) (2,352) (386) (193) (191) (45) (9,021) (1,143) (4,480) (774) (378) (409) (8,572) (16,250) 8,389 17,187

 

Note 4. Non-interest income (cash earnings basis) $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Net fee income Facility fees Transaction fees Other non-risk fee income Fee income Credit card loyalty programs Transaction fees related expenses Fee expenses Net fee income Net wealth management and insurance income Wealth management income Life insurance premium income General insurance and LMI net premium earned Life insurance investment and other income General insurance and LMI investment and other income Total insurance premium, investment and other income Life insurance claims and changes in insurance liabilities General insurance and LMI claims and other expenses Total insurance claims, changes in liabilities and other expenses Net wealth management and insurance income Trading income Other operating income Dividends received from other entities Net gain on sale of associates Net gain on disposal of assets Net gain/(loss) on derivatives held for risk management purposes Net gain/(loss) on financial instruments measured at FVIS Gain/(loss) on disposal of controlled entities Rental income on operating leases Share of associates net profit/(loss) Other Total other operating income Total non-interest income 375 624 (59) 792 1,268 71 940 2,131 (63) (51) (126) (95) (114) (221) 826 1,910 (32) 1,145 707 240 23 25 1,410 472 622 50 995 2,554 (414) (226) (1,396) (286) (640) (1,682) 323 2,017 464 926 4 38 2 (11) 30 3 8 (10) 37 3 - 24 32 38 (9) 26 (10) 21 101 125 1,714 4,978

 

Note 5. Operating expenses (cash earnings basis) $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Staff expenses Employee remuneration, entitlements and on-costs Superannuation expense Share-based payments Restructuring costs Total staff expenses Occupancy expenses Operating lease rentals Depreciation of property and equipment Other Total occupancy expenses Technology expenses Amortisation and impairment of software assets Depreciation and impairment of IT equipment Technology services Software maintenance and licences Telecommunications Data processing Total technology expenses Other expenses Professional and processing services Amortisation and impairment of intangible assets Postage and stationery Advertising Non-lending losses Other expenses Total other expenses Operating expenses 2,218 194 57 155 4,342 386 95 114 2,624 4,937 343 80 74 632 164 156 497 952 334 68 405 185 109 38 620 141 729 362 215 77 1,139 2,144 453 5 87 129 (9) 116 902 113 182 203 133 132 781 1,665 5,041 9,698

 

Note 8. Group earnings reconciliation Six months to 31 March 2019 Policyholder Merchant Other Interest Operating tax and card fees and carrying $m leases recoveries Line fees schemes expenses adjustment Presentation changes Net interest income Net fee income Net wealth management and insurance income Trading income Other Income Non-interest income Net operating income Staff expenses Occupancy expenses Technology expenses Other expenses Operating expenses Core earnings Impairment benefits / (charges) Operating profit before tax Income tax expense Net profit Net profit attributable to non-controlling interests NET PROFIT ATTRIBUTABLE TO OWNERS OF WBC - - - - - - - - - - - - - (1) - - - - - - - - - - (29) - - - - - - - (1) - (29) (29) (1) - - - - (30) (29) (1) - - - - (30) - - - - - - 29 - - - - - - - - - - - - - - - - - - 29 - - 29 - - - - - 29 - (1) - - - - - - - - - - (1) - - (1) - - - - - 1 - - - - (1) 1 - - - - - - - - - - - - - - - - - - - - - Cash earnings adjustments Six months to 31 March 2019 $m Reported results Fair value Amortisation (gain)/loss Adjustment of intangible economic Ineffective related to Treasury Presentation assets on hedges hedges Pendal shares changes Cash earnings Net interest income Net fee income Net wealth management and insurance income Trading income Other Income Non-interest income Net operating income Staff expenses Occupancy expenses Technology expenses Other expenses Operating expenses Core earnings Impairment charges Operating profit before tax Income tax expense Net profit Net profit attributable to non-controlling interests NET PROFIT ATTRIBUTABLE TO OWNERS OF WBC WBC Cash earnings adjustments: Amortisation of intangible assets Fair value (gain)/loss on economic hedges Ineffective hedges Adjustment related to Pendal Treasury shares Cash earnings 8,263 826 326 437 127 - 133 (7) - - - - - - - - - - - - - (2) (1) - 27 - - - - - 17 - (14) - (29) 8,389 826 323 464 101 1,716 - 44 - (14) (2) (30) 1,714 9,979 - 177 (7) (14) (2) (30) 10,103 (2,645) (526) (1,139) (781) - - - 21 - - - - - - - 29 - - - - - - - - - - - - (2,624) (497) (1,139) (781) (5,091) - - - 21 - 29 (5,041) 4,888 (333) - 177 (7) 7 (2) (1) - - - - - - 5,062 (333) 4,555 (1,379) - 177 (7) 7 (2) (1) - (52) 2 (2) - 1 4,729 (1,430) 3,176 (3) - 125 (5) 5 (2) - - - - - - - 3,299 (3) 3,173 - 125 (5) 5 (2) - 125 (5) 5 (2) - - - - - - - - (125) - - - - - - 5 - - - - - - (5) - - - - - - 2 - 3,296 - - - - - 3,296 - - - - - - 3,296

 

Note 8. Group Earnings Reconciliations Twelve months to 30 September 2018 Policyholder Merchant Other Interest Operating tax and card fees and carrying $m leases recoveries Line fees schemes expenses adjustment Presentation changes Net interest income Net fee income Net wealth management and insurance income Trading income Other Income Non-interest income Net operating income Staff expenses Occupancy expenses Technology expenses Other expenses Operating expenses Core earnings Impairment benefits / (charges) Operating profit before tax Income tax expense Net profit Net profit attributable to non-controlling interests NET PROFIT ATTRIBUTABLE TO OWNERS OF WBC - - 667 - 66 115 - - (667) 203 (50) - - (35) - - - - - - - - - - (81) - - - 6 - 848 (514) (35) - (75) (81) (35) (667) 203 (44) - (624) (81) (35) - 203 22 115 224 - - - (50) - - 81 - - - - - - - - (31) (3) - - - - (122) (32) - 81 - - (203) (35) - (50) 81 (34) (154) (157) - (35) - - (13) 115 - - - - 13 (115) 67 (102) - (35) - - - - - 35 - - - - (35) 35 - - - - - - - - - - - - - - - - - - - - - Cash earnings adjustments Twelve months to 30 September 2018 $m Reported results Fair value Amortisation (gain)/loss Adjustment of intangible economic Ineffective related to Treasury Presentation assets on hedges hedges Pendal shares changes Cash earnings Net interest income Net fee income Net wealth management and insurance income Trading income Other Income Non-interest income Net operating income Staff expenses Occupancy expenses Technology expenses Other expenses Operating expenses Core earnings Impairment charges Operating profit before tax Income tax expense Net profit Net profit attributable to non-controlling interests NET PROFIT ATTRIBUTABLE TO OWNERS OF WBC WBC Cash earnings adjustments: Amortisation of intangible assets Fair value (gain)/loss on economic hedges Ineffective hedges Adjustment related to Pendal Treasury shares Cash earnings 16,505 2,424 2,061 945 72 - (184) 18 - - 848 - - - - - (514) - - - - (9) (35) - (19) - - - - - 24 - 104 - (75) 17,187 1,910 2,017 926 125 5,502 - 5 - 104 (9) (624) 4,978 22,007 - (179) 18 104 (9) 224 22,165 (4,887) (1,033) (2,110) (1,536) - - - - - (50) - - - - - 81 - - - - - (34) 25 - - - - (154) (4,937) (952) (2,144) (1,665) (9,566) 25 - - - - (157) (9,698) 12,441 (710) 25 (179) 18 104 (9) 67 - - - - - (102) 12,467 (812) 11,731 (3,632) 25 (179) 18 104 (9) (35) (8) 53 (5) (31) 2 35 11,655 (3,586) 8,099 (4) 17 (126) 13 73 (7) - - - - - - - 8,069 (4) 8,095 17 (126) 13 73 (7) 17 (126) 13 73 (7) - (17) - - - - - - 126 - - - - - - (13) - - - - - - (73) - - - - - - 7 - 8,065 - - - - - 8,065 - - - - - - 8,065

 

Note 9. Divisional result and economic profit Six months to 30 September 2019 $m Group Westpac Institutional Westpac New Consumer Business Bank Zealand Reported results Cash earnings adjustments Cash earnings Franking Benefit Adjusted cash earnings Average equity Capital charge Economic profit Return on average equity (including intangibles) Six months to 31 March 2019 $m Reported results Cash earnings adjustments Cash earnings Franking Benefit Adjusted cash earnings Average equity Capital charge Economic profit Return on average equity (including intangibles) 3,173 123 1,607 1,262 544 519 - 5 - 5 3,296 839 1,607 1,267 544 524 475 383 124 - 4,135 2,082 1,650 668 524 63,348 (3,475) 20,591 13,824 7,547 5,272 (1,129) (758) (414) (289) 660 953 892 254 235 10.4% 12.9% 14.1% 13.6% 18.2% Twelve months to 30 September 2019 $m Reported results Cash earnings adjustments Cash earnings Franking Benefit Adjusted cash earnings Average equity Capital charge Economic profit Return on average equity (including intangibles) Twelve months to 30 September 2018 $m Reported results Cash earnings adjustments Cash earnings Franking Benefit Adjusted cash earnings Average equity Capital charge Economic profit Return on average equity (including intangibles) 8,095 (30) 3,408 2,680 1,093 947 15 76 - (13) 8,065 2,201 3,423 2,756 1,093 934 1,035 837 279 - 10,266 4,458 3,593 1,372 934 62,017 (6,822) 20,089 14,135 8,045 4,661 (2,210) (1,555) (885) (513) 3,444 2,248 2,038 487 421 13.0% 13.9% 15.1% 12.7% 18.2%

 

6.7.2 Westpac New Zealand division performance (A$ Equivalent to Section 3.5) $bn As at 30 Sept 2019 As at% Mov't 30 March Sept 19 - 2019Mar 19 As at 30 Sept 2019 As at% Mov't 30 Sept Sept 19 - 2018Sept 18 Customer deposits Net loans Deposit to loan ratio Total assets TCE Third party liquid assets Average interest-earning assets Total funds 61.5 78.6 78.20% 89.5 109.1 8.7 85.0 10.4 56.7 73.6 76.99% 82.4 102.5 6.9 80.2 9.8 $m Half Year Sept 19 % Mov't Half Year Sept 19 - March 19 Mar 19 Full Year Sept 19 % Mov't Full Year Sept 19 - Sept 18Sept 18 Net interest income Non-interest income Net operating income Operating expenses Core earnings Impairment (charges)/benefits Operating profit before tax Tax and non-controlling interests Cash earnings Add back notable items Cash earnings excluding notable items Economic profit Expense to income ratio Net interest margin 945 234 1,799 373 1,179 (453) 2,172 (855) 726 (14) 1,317 (22) 712 (188) 1,295 (361) 524 934 - 12 524 946 235 38.46% 2.23% 421 39.34% 2.24%