Morgan Stanley

Financials Forum

Westpac Institutional Bank

Debt Markets

Tony Masciantonio

Managing Director

Debt Markets

12 September 2013

WIB Debt Markets, September 2013 - Morgan Stanley Financials Forum

Partner with customers, communities and our people to prosper and grow as

Australasia’s undisputed number one institutional bank

Delivering via

institutional

insights

The best people who understand customers’ needs

Foster an intelligent and confident risk culture

Support ethical and sustainable development

Grow international capability with a focus on Asia

Invest in technology and innovation where it matters

Earn our customers’

business by

delivering superior

solutions and

service

Westpac Institutional Bank’s strategy

Page 2

A strategy aligned to the Westpac Group’s strategy

focussed on deep and enduring customer relationships

WIB Debt Markets, September 2013 - Morgan Stanley Financials Forum

The best people who

understand customers’ needs

Foster an intelligent and

confident risk culture

Support ethical and

sustainable development

Grow international capability

with a focus on Asia

Invest in technology and

innovation where it matters

Recent strategic progress

Page 3

• Lead1 Transactional Bank 10 years in a row

• Lead1 Relationship Bank 2 years in a row

• Won transactional business of NSW Government for next 5 years

• Introduced evergreen2 deposit product

• Completed technology foundations for scalable growth in Asia

• Leader in super gateway3 (approx 50% share)

• Launched WIBIQ – new online research and strategy portal

• Material reduction in stressed exposures to TCE4 in 1H13, down

50bps to 1.6%

• Refreshed Environment, Social and Governance (ESG) risk policy

• Social benefit bond launched

• Thought leadership in social and affordable housing

• Partnership with Mission Australia now in its 3rd year

• Opened first branch in India

• One of two Aussie banks to earn a CNY/AUD market makers license

• Key strategic appointments – superior local knowledge

1 Peter Lee Associates Large Corporate and Institutional Transactional Banking Survey Australia. Rank vs. top 4. Westpac ranks No. 1 for

citations as ‘lead’ transactional bank for 2004-2013 and 'lead' relationship bank for 2012-2013. 2 See slide 10 for further details. 3 Source APRA

Superannuation Fund-level Profiles and Financial Performance June 2012 (9 Jan 2013), ATO Fund Validation Service Version 5.0 (Aug 2013).

4 TCE is total committed exposure.

WIB Debt Markets, September 2013 - Morgan Stanley Financials Forum

• Focus on ROTE2

• Efficient

management of

margins

• Deeper customer

relationships whilst

managing risk adjusted return

• Tilt to key segments, e.g. natural

resources, trade and Asia

• Strong transactional

customer activity

• Build WIB/AFS1

opportunity

• Strong deposit to loan ratio

• Self funding new loan growth

• Strong risk culture

supporting high credit

quality

• Disciplined

expense

management

• Maintain revenue per

average FTE

• Delivering value from

payments SIP3

Seek to be Australasia’s

No.1 Institutional Bank

Managing WIB in a disciplined way

Page 4

Strength Growth

Productivity Return

1 AFS is the Australian Financial Services division including the Westpac’s Australian retail banking and wealth operations. 2 ROTE is

return on tangible ordinary equity. 3 SIP is Westpac’s Strategic Investment priorities a suite of major investments across the Group

including payments.

WIB Debt Markets, September 2013 - Morgan Stanley Financials Forum

• Rates - Trading and sales

- Inflation

- Govt Bonds and agency

- OTC derivatives

• Credit - Trading and sales

- Credit relative value

- Structured credit

• Research/Strategy - Economics

- Credit and rates

• Collateral management

and pricing

• Corporate loan origination

• Acquisition and leveraged

finance

• Project finance

• Structured finance and

securitisation

• Asset finance and leasing

• Debt securities issuance

including private

placements

• Syndication - Bank,

Institutional & Retail

Debt Markets in context

Page 5

Debt Capital

Markets

Global Capital

Markets

Credit Portfolio

Management

Active market maker in

fixed income and credit

Innovative solutions tailored

to meet customer needs

• Loan and deposit book

• Dynamic asset portfolio

management – managing

customer exposure

• Centralised distribution and

pricing of deposits and

investments

• Quality analytics – more

efficient products

• Pricing and risk analysis

frameworks

Co-ordinated approach to

balance sheet management

Global reach, local knowledge

Strength in managing end-to-end customer business in Debt Markets

WIB Debt Markets, September 2013 - Morgan Stanley Financials Forum

Debt Markets - strong contributor to WIB

Debt Markets

FX&CCE

Global TransactionalServices

Hastings

Other

736 779 679

849 842 985

2H10 1H11 2H11 1H12 2H12 1H13

59.8

WIB 1H13 revenue by business unit (%)

Debt Markets revenue2 ($m)

• Largest contributor to WIB earnings

at 60% in 1H13

• Re-alignment of strategy has

delivered good growth and improved

earnings consistency

• Business continues to benefit from

having the right people, products and

platforms

Debt Markets revenue 1H13 (%)

Page 6

56

13

25

6

Credit Portfolio Management

Debt Capital Markets

Global Capital Markets

Other

1 FX&CCE is Foreign exchange, commodities, carbon and energy. 2 Debt Markets revenue for 2H10, 1H11 and 2H11 not restated for changes

in capital allocation and transfer pricing methodology implemented in 2H12 nor changes in customer allocation between business divisions. In

1H13 result included some one-offs and positive CVA.

13.8

22.6

3.4 0.4

1

WIB Debt Markets, September 2013 - Morgan Stanley Financials Forum

Debt Markets - strategy and priorities • Remain strong

• Deeper understanding of customer

needs

• Build competitive edge in core business

– platform, products and people

Page 7

Debt Markets value creation

• Strengthen ‘originate to distribute’ model

for end-to-end customer solutions

• Move to an opportunity-led rather than a

product led strategy in working with AFS

• Be the trusted advisor for changing

regulation

Market making/trading

Investo

rs

Bo

rro

wers

Balance sheet

Primary

syndication

Secondary sales

Repackaging risk

Origination

underwriting

structuring

Risk

management

WIB Debt Markets, September 2013 - Morgan Stanley Financials Forum

Remain strong

Grow core business

Strengthen originate to

distribute model

Expand opportunity-led

solutions with AFS

Customer needs

Debt Markets - strategic priorities

Page 8

• Realigned funding model, deposit to loan ratio>100% for WIB

• Debt Markets core technology platform upgraded

• Maintained No.1 position in Fixed Income1

• Enhanced knowledge of customer needs, particularly investor customers

• Aligned business initiatives with strategic priorities

• Significant success in attracting best people post GFC

• Expanding products, particularly non-lending alternatives

• On-line capability improved

• Increased profitability despite modest balance sheet growth

• Commitment to market liquidity

• Building capabilities in Asia

• Established retail syndicate and manufacturing/distribution capability

• Focusing on client/product suitability and selling risks

Trusted advisor

• Delivering superior customer experience via relationship model

• Appling learnings from changed environment: clients, markets, regulatory

• Launched WIBIQ -new online research and strategy portal

1 Peter Lee Associates Debt Securities Investors Australia Survey 2012. Rank vs. top 4 major domestic banks. From minimum 10 most active investors. Based upon Westpac

achieving a no. 1 ranking amongst the four major domestic banks for estimated market share across Commonwealth Treasury and Semi Government Bonds, Covered Bonds,

Corporate Bonds, Asset Backed Bonds and CPI Linked Securities, a no. 1 ranking for Relationship Strength amongst the four major domestic banks across Commonwealth Treasury

and Semi Government Bonds and Asset Backed Bonds, a no. 1 ranking for overall service quality in CPI Linked Securities and a no. 1 ranking for best service in Covered Bonds.

WIB Debt Markets, September 2013 - Morgan Stanley Financials Forum

Delivering for customers - case studies

Page 9

Case study 1 : Link Market Services

Pacific Equity Partners raised A$710m in 3.5

year LBO debt finance for its investee

company Link Market Services

Long standing Westpac customer providing a

full suite of banking services: lending;

hedging; cash management; and

agency/security trustee

Lead arranger, sole underwriter, bookrunner

and hedge counterparty

Westpac provided a 100% underwritten

commitment providing funding certainty

Westpac’s experience provided strong support

in a competitive and compressed time period

Source: Westpac as of June 2013 June 2013

Lead arranger,

underwriter bookrunner

A$710 million

Case study 2 : Brookfield Rail

Brookfield WA Rail Pty Ltd raised US$700m

via a 7, 9, 10 & 12 year US private placement.

First time accessing off-shore capital markets

Westpac and Bank of America Merrill Lynch

were joint lead managers

Westpac’s knowledge and market-leading

products assisted Brookfield Rail achieve a

total refinancing solution of $1.3bn

Westpac provided a suite of products/

services including: US private placement;

A$560m bank debt facility (lead manager);

facility; agent for the debt facility; security

trustee; and hedge counterparty for cross

currency and interest rate swaps

January 2013

US$700 million Due 2020, 2022, 2023 & 2025

Source: Bloomberg & Westpac, as of

February 2013

Joint lead manager

WIB Debt Markets, September 2013 - Morgan Stanley Financials Forum

Re-shaping the funding model

Page 10

• Re-shaped how funding is

considered and managed

• Put strong focus on deposits -

deposit to loan ratio 130% at

July 13 (up from 89% at Sept 10)

• Enhanced distribution of vanilla

products

• New product development

supporting Basel III liquidity

reforms

– Specialist long-term structured

product development team

– New cash management

products

– Leveraging AFS client base

80

90

100

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130

140

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Product innovation

• New investment account “evergreen” offering high

interest while providing the option to withdraw

(some or all funds) after serving a notice period

• Available via Corporate Online

• Allows dynamic management of cash flow

• Product now being rolled out to retail brands

Winner 2013 Australian

Business Award for Product Innovation

WIB deposit to loan ratio (%)

WIB Debt Markets, September 2013 - Morgan Stanley Financials Forum

Current insights on trends in Debt Markets

• Business remains cautious although some pick up in activity in

key areas

• Loan growth remains subdued while competition remains strong

• Competition for deposits remains strong although increasingly

managing margins

• Margin pressure remains

• Market volatility supporting customer business in fixed income

and FX – this is expected to continue

• Risks and opportunities from new regulation

Page 11

Thank You

WIB Debt Markets, September 2013 - Morgan Stanley Financials Forum

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 Interim 2013 Results (incorporating the requirements of Appendix 4D) for the half year ended 31 March 2013 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 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, 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’, ‘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 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 may 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 those described in the section entitled ‘Risk factors' in Westpac’s

Interim Financial Report for the half year ended 31 March 2013 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, and do not intend, to update any forward-looking statements contained in this presentation.

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