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Full Year 2015 Financial Result Incorporating the Requirements of Appendix 4E Results Announcement to the Market

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Full Year 2015 Financial Result Incorporating the Requirements of Appendix 4E Results Announcement to the Market Westpac Banking Corporation ABN 33 007 457 141 What’s important to you is important to us. Full Year 2015 Financial Result Incorporating the requirements of Appendix 4E Results announcement to the market ASX Appendix 4E 1 Results for announcement to the market 2 Report for the full year ended 30 September 2015 Revenue from ordinary activities3,4 ($m) up 9% to $21,642 Profit from ordinary activities after tax attributable to equity holders4 ($m) up 6% to $8,012 Net profit for the period attributable to equity holders4 ($m) up 6% to $8,012 Amount Franked amount Dividend Distributions (cents per ordinary share) per security per security Final Dividend 94 94 Interim Dividend 93 93 13 November 2015 (Sydney) Record date for determining entitlements to the dividend 12 November 2015 (New York) 1 This document comprises the Westpac Group 2015 Full Year Financial Results and is provided to the Australian Securities Exchange under Listing Rule 4.3A. 2 This report should be read in conjunction with the Westpac Group Annual Report 2015 and any public announcements made in the period by the Westpac Group in accordance with the continuous disclosure requirements of the Corporations Act 2001 and ASX Listing Rules. 3 Comprises reported interest income, interest expense and non-interest income. 4 All comparisons are with the reported results for the twelve months ended 30 September 2014. ii | Westpac Group 2015 Full Year Results Announcement Results announcement to the market Media release and outlook Media Release 2 November 2015 WESTPAC DELIVERS SOLID FULL YEAR 2015 RESULT Westpac Group today announced statutory net profit for the 12 months to 30 September 2015 of $8,012 million, up 6% over the prior year. This result is unchanged from the Group’s Preliminary Full Year 2015 Result released on 14 October to support its Share Entitlement Offer. Highlights of the cash earnings result compared to the prior year included1: Cash earnings per share of 249.5 cents, up 2%; Cash return on equity (ROE) of 15.8%, down 57 basis points; Cash earnings of $7,820 million, up 3%; Final, fully franked dividend of 94 cents per share (cps), taking total dividends paid for the year to 187 cps, up 3%; Common equity tier 1 capital ratio of 9.5%; Sector leading expense to income ratio of 42.0%; Lending and customer deposit growth of 7% and 4% respectively; and Awarded the Most Sustainable Bank Globally in the 2015 Dow Jones Sustainability Indices. Westpac Chief Executive Officer, Mr Brian Hartzer, said that the result reflected the consistent execution of the Group’s service-led strategy. “Australian retail and business banking has been the key driver of performance, with Westpac RBB increasing cash earnings by 8% and St. George up by 7%. The New Zealand division also reported a 6% increase in cash earnings (in NZ$). “All divisions continued to grow their businesses and are in good shape. However, some market headwinds contributed to a softer performance in our wealth and institutional businesses. “We have a high quality, well-performing franchise. Our balance sheet is strong, we have significantly increased capital levels, and our asset quality is sector-leading. “Importantly, our sustainability work over many years continues to drive how we do business and we are pleased to be once again recognised as the Most Sustainable Bank Globally in the 2015 Dow Jones Sustainability Indices,” Mr Hartzer said. 1 Reported on a cash earnings basis unless otherwise stated. For an explanation of cash earnings and reconciliation to reported results refer to pages 4, 5 and 116-119 of the Group’s 2015 Full Year Results announcement. Westpac Group 2015 Full Year Results Announcement | iii Results announcement to the market DELIVERING ON THE STRATEGY In September 2015 Westpac outlined its strategy and announced it was accelerating plans to build one of the world's great service companies. This included increasing its annual investment to around $1.3 billion, directed towards growth, service and efficiency initiatives. It also announced additional performance measures, including targeting a ROE of above 15%, adding more than one million new customers to the bank, a rise in products per customer, and an expense to income ratio of below 40% within three years. Mr Hartzer said he was pleased with the progress of initiatives underway to support the strategy including: 36% of branches converted to new smaller, more interactive formats; 99% of Westpac branches have installed Connect Now, delivering immediate video access to business specialists; Completed migration of Westpac Retail & Business Banking customers to ‘Westpac Live’—our new online/mobile platform—which was rated the number 1 online/mobile platform in Australia and number 2 in the world1; Launched Live Online Lending Application (‘LOLA’), with over $30 billion of limits conditionally pre-approved for existing business customers; Launched ‘Wonder’, a new online system to help Westpac home loan customers understand and better use the value in their home; and Launched ‘Westpac One’, a new online/mobile platform in New Zealand. CAPITAL POSITION AND DIVIDENDS Mr Hartzer said allowing for the approximately $3.5 billion of ordinary equity expected to be raised through its recent renounceable entitlement offer, Westpac will be well within the top quartile of banks globally with a CET1 ratio of over 14% on an internationally comparable measure2. This follows $2.5 billion in capital raised earlier in the year through the partial underwrite of the 2015 interim dividend and the sale of part of the Group’s shareholding in BTIM. “The capital raised responds to regulatory changes that increase the amount of capital needed to be held against mortgages by more than 50%. “Our capital raising allows us to meet regulatory requirements while continuing to support growth in the Australian economy,” Mr Hartzer said. The Board has increased the final dividend by 1 cps to 94 cps (compared to the interim 2015 dividend). This takes the total dividends for the year to 187cps, up 3% and represents a payout ratio of 75% of cash earnings. The Group will issue shares to satisfy the DRP for the final dividend, with no discount applied. FINANCIAL HIGHLIGHTS Key financial aspects of the FY15 result3,4 compared to FY14: Net interest income of $14,239 million, up 6%, with net interest margin unchanged; Non-interest income of $6,301 million, with volume growth offset by higher general insurance claims and lower trading income following changes made to derivative valuation methodologies5; Total lending rose 7% over the year. Australian housing loans increased 7%, personal lending rose by 5%, and business lending increased by 6%. New Zealand lending increased 7% in NZ$. Customer deposits increased $17.9 billion, up 4%, with similar growth across Australia and New Zealand; A sector leading expense to income ratio of 42.0%; and Asset quality improved over the year with stressed exposures to total committed exposures falling 25bps to 0.99%. While impairment charges rose 16%, at 12 basis points of average loans they remain at very low levels. 1 June 2015 Australian Mobile Banking Functionality Benchmark and July 2015 Global Mobile Banking Functionality Benchmark from Forrester Research. 2 The basis of the internationally comparable CET1 capital ratio aligns with the APRA study titled “International capital comparison study” dated 13 July 2015. 3 Cash earning basis. 4 All comparisons in the commentary are to the prior corresponding period unless otherwise stated. 5 This includes the first time adoption of a Funding Valuation Adjustment (FVA) to the fair value of derivatives in First Half 2015. iv | Westpac Group 2015 Full Year Results Announcement Results announcement to the market DIVISIONAL PERFORMANCE: FY15 CASH EARNINGS1 % % increase increase Cash earnings ($million) FY15 2H15 1H15 FY15- 2H15- FY14 1H15 Westpac Retail & Business Banking 2,788 1,438 1,350 8 7 St. George Banking Group 1,688 851 837 7 2 BT Financial Group 904 453 451 0 0 Westpac Institutional Bank 1,286 662 624 (12) 6 New Zealand (NZ$) 916 475 441 6 8 Westpac RBB’s focus on service and having Australia's leading mobile/online capability for customers helped deliver both core and cash earnings growth of 8%. Record customer growth of over 191,000 helped drive loan and deposit growth up 6% and 7% respectively. St. George Banking Group’s brands, St. George, BankSA, Bank of Melbourne and RAMS contributed to the 7% increase in cash earnings, with core earnings rising 8%. The Bank of Melbourne opened its 100th branch during the year and was voted best regional bank in Australia for the second time2. Revenue increased 7% with net interest income up 7% due to 8% growth in lending and a 3% rise in deposits. BT Financial Group continues to be the leading wealth provider in Australia, ranking number 1 on all Platforms, with Funds under Administration (FUA) share of 19.9%. BTFG delivered flat cash earnings over the year with the result impacted by the partial sale of BTIM, lower performance fees, and higher insurance claims. Westpac Institutional Bank is the number one institutional banking franchise in Australia. Financial conditions have been challenging, with margins 15 basis points lower in line with global capital market conditions. This contributed to a 12% reduction in cash earnings to $1,286 million. The decline was also due to methodology changes to derivative valuations (which reduced revenue by $122 million) and a lower impairment benefit. The business continued to achieve good underlying growth, with lending up 12% and customer revenue up 2%. Westpac New Zealand delivered another solid result with a 7% increase in core earnings and a 6% increase in cash earnings (9% and 8% respectively in A$). The result was supported by revenue growth of 7% and good balance sheet growth, with a 7% rise in lending and a 5% increase in deposits.
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