Investor Presentaiton
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Appendix 7: Definitions – segments, earnings drivers, capital and Appendix
liquidity.
Segments
Consumer
Business
WIB
Westpac NZ
Specialist
Businesses
Group Businesses
or GB
Earnings drivers
Average interest-
earning assets
(AIEA)
Cash earnings
per ordinary
share
Core earnings
Full-time
equivalent
employees (FTE)
Consumer provides banking products and services, including mortgages, credit
cards, personal loans, and savings and deposit products to Australian retail
customers
Business serves the banking needs of Australian small business, Agribusiness and
Commercial customers
Westpac Institutional Bank (WIB) provides a broad range of financial products and
services to corporate, institutional and government customers
Westpac New Zealand provides banking, wealth and insurance products and
services for consumer, business and institutional customers in New Zealand
Specialist Businesses comprises the operations that Westpac has decided to exit.
The sale of Westpac Life Insurance Limited was completed in August 2022. In
2022, separate agreements were entered into to merge BT's personal and
corporate superannuation funds through a successor fund transfer as well as the
sale of Advance Asset Management. These transactions are subject to regulatory
approval, and if granted are expected to complete in 2023. Other operations yet to
be sold include the platforms. Special Businesses also manages Westpac Pacific
which provides banking in Fiji and Papua New Guinea. The division operates
under the Westpac, St.George, BankSA, Bank of Melbourne, and BT brands.
Group Businesses includes support functions such as Treasury, Customer
Services and Technology, Corporate Services and Enterprise Services. It also
includes Group-wide elimination entries arising on consolidation, centrally raised
provisions and other unallocated revenue and expenses
The average balance of assets held by the Group that generate interest income.
Where possible, daily balances are used to calculate the average balance
Cash earnings divided by the weighted average ordinary shares
(cash earnings basis)
Net operating income less operating expenses
A calculation based on the number of hours worked by full and part-time employees
as part of their normal duties. For example, the full-time equivalent of one FTE is 76
hours paid work per fortnight
Capital and liquidity
Capital ratios
Committed
liquidity facility
(CLF)
High quality liquid
assets (HQLA)
Internationally
comparable
ratios
Leverage ratio
Liquidity
coverage ratio
(LCR)
Net stable funding
ratio (NSFR)
Risk weighted
assets or RWA
As defined by APRA (unless stated otherwise)
The RBA makes available to Australian Authorised Deposit-taking Institutions
(ADIs) a CLF that, subject to qualifying conditions, can be accessed to meet LCR
requirements under APS210 Liquidity. APRA announced in September 2021 that
ADIS subject to the LCR should reduce their CLF usage to zero by 1 January 2023.
Assets which meet APRA's criteria for inclusion as HQLA in the numerator of the
LCR
Internationally comparable regulatory capital ratios are Westpac's estimated ratios
after adjusting the capital ratios determined under APRA Basel III regulations for
various items. Analysis aligns with the APRA study titled "International capital
comparison study" dated 13 July 2015
As defined by APRA (unless stated otherwise). Tier 1 capital divided by 'exposure
measure' and expressed as a percentage. 'Exposure measure' is the sum of on-
balance sheet exposures, derivative exposures, securities financing transaction
exposures and other off-balance sheet exposures
An APRA requirement to maintain an adequate level of unencumbered high quality
liquid assets, to meet liquidity needs for a 30 calendar day period under an APRA-
defined severe stress scenario. Absent a situation of financial stress, the value of
the LCR must not be less than 100%, effective 1 January 2015. LCR is calculated
as the percentage ratio of stock of HQLA and CLF over the total net cash out-flows
in a modelled 30 day defined stressed scenario
The NSFR is defined as the ratio of the amount of available stable funding (ASF) to
the amount of required stable funding (RSF) defined by APRA. The amount of ASF
is the portion of an ADI's capital and liabilities expected to be a reliable source of
funds over a one year time horizon. The amount of RSF is a function of the liquidity
characteristics and residual maturities of an ADI's assets and off-balance sheet
activities. ADI's must maintain an NSFR of at least 100%
Assets (both on and off-balance sheet) are risk weighted according to each asset's
inherent potential for default and what the likely losses would be in case of default.
In the case of non-asset-backed risks (ie. market and operational risk), RWA is
determined by multiplying the capital requirements for those risks by 12.5
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