Form 6-K Westpac Banking Corp

6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

Published: 2017-11-09 06:04:22
Submitted: 2017-11-09
Period Ending In: 2017-11-09
a17-25178_26k.htm 6-K


 

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

 

November 9, 2017

 

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                        

 

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): 
__________

 

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):
___________

 



 

Index to Exhibits

 

Exhibit
No.

 

Description

 

 

 

1

 

2017 Westpac Group Annual Review & Sustainability Report

2

 

Westpac 2017 Annual General Meeting Notice of Meeting

 



 

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:    November 9, 2017

By:
 
/s/ Sean Crellin
                           

 

Sean Crellin

 

Director – Corporate, Legal and

Secretariat

 


a17-25178_2ex1.htm EX-1


Exhibit 1

Proudly Supporting Australia for 200 Years 2017 Westpac Group Annual Review & Sustainability Report

 


WESTPAC GROUP On the 8th April 2017 Westpac reached a significant milestone, celebrating its 200th anniversary. For 200 years we have helped millions of customers across Australia and New Zealand manage their finances and realise their dreams. Much has changed since our company first began but our commitment to helping our customers, communities and people to prosper and grow remains at the heart of everything we do. IN THIS REPORT given the opportunity for babies born in 2017 to get a financial head start by depositing $200 into their Westpac Bump Savings account.1 2 2017 HIGHLIGHTS 2 3 4 5 Supporting customers Supporting shareholders Supporting employees Supporting communities 6 12 CHAIRMAN’S REPORT CEO’S LETTER 13 14 14 16 19 19 21 Bringing our vision to life 2017 performance—an overview Financial performance Customer performance Culture and reputation Improving our reputation Getting it right and—when we don’t—putting it right Creating a sustainable future Preparing for a digital future Summary More than 800 employees like Harry Hu have taken part in Jawun secondments to support Indigenous-led organisations. 21 22 23 24 SUSTAINABILITY LEADERSHIP 28 FIVE-YEAR SUMMARY 30 EXECUTIVE TEAM 31 BOARD OF DIRECTORS 32 REMUNERATION 33 FINANCIAL CALENDAR & CONTACT DETAILS mentoring and a loan, now Redspear Safety is looking overseas. ON THE COVER Bank of New South Wales employees in 1951 on the 100th anniversary of the Bank’s presence in Victoria, and former commercial airline pilot Johanne Parniczky, who is a Change Director working on one of Westpac’s biggest technology infrastructure programs. Read Johanne’s story on page 20 and online via the website address below. With a partnership going back 170 years, Westpac and AGL are enabling new renewable energy solutions. You can read more about our customer stories and financial results online at 2017annualreport.westpacgroup.com.au Westpac Banking Corporation ABN 33 007 457 141 1. Westpac Bump Savings account terms and conditions are available at www.bump.westpacgroup.com.au. It started with business In our 200th year, we’ve

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 1 lie Beach farmer Peterson and his amily survived Tropical clone Debbie and have ebuilt their property with estpac’s support. Ex-pilot and now Westpac employee Johanne Parniczky has transferred her skills and is helping drive the digital revolution. We’re supporting Luke Terry as he sets a new cycle for social change. We’re helping Monsta Surf take on well established surf wear companies and prove dreams really can come true. For 23 years we’ve supported Wakatu Incorporation as it shares its wonderful South Island produce around the world. AGL image: Broken Hill Solar Farm is owned by the Powering Australian Renewables Fund (PARF). Image courtesy of PARF. Air Ian f Cy r W

 


2 WESTPAC GROUP 2017 HIGHLIGHTS digitally active Australian NZ$47bn in New Zealand home loans Image of John Harris courtesy of the collections of the State Library of NSW Supporting customers Today the Westpac Group supports 13.8 million customers across its main markets. The honour of being the Bank’s first official customer goes to John Harris, one of the Bank’s founding Directors, who deposited £138 on the day the Bank of New South Wales opened, 8 April 1817. CUSTOMER CUSTOMER MAKING BANKING COMPLIMENTS COMPLAINTS MORE ACCESSIBLE 3.5x 18%4.5m 3.5 times as many across Australian banking customers compliments as operations complaints¹ From buying a home to starting and growing a business, we’re helping customers achieve their goals. $427bn in Australian home loans and $487bn of customer deposits $151bn in loans to Australian businesses and NZ$29bn in loans to New Zealand businesses $1,068m in life insurance in-force premiums 1. Across the Australian branch network. All dollar amounts are Australian dollars unless otherwise indicated. All numbers are on a cash earnings basis and are for the 12 months ended 30 September 2017 unless otherwise indicated. All comparisons are against results for the 12 months ended 30 September 2016 unless otherwise indicated.

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 3 Common equity tier 1 capital ratio of 10.6%, exceeding the capital to establish the Bank of New South Wales. to gross loans 0.22% 8,012 paid in cash return expense to 7,561 D’Arcy Wentworth’s receipt for £75, paid as his second instalment 29 September 2017 of $31.92. $108bn1 WESTPAC GROUP MARKET CAPITALISATION Supporting shareholders A STRONG BALANCE SHEET APRA’s ‘unquestionably strong’ benchmark Westpac’s 630,000 shareholders include many Australian individuals and super funds but back in 1817 it was Liquidity coverage ratio 124% 39 merchants, professionals and craftsmen who provided Gross impaired assets Between them they acquired 200 shares, each worth £100, to provide a total nominal capital of £20,000 to start the Bank. BUILDING LONG-TERM VALUE REPORTED PROFIT ($MILLIONS) 7,990 $6.3bn 13.8%42%7,445 dividends on equity income ratio 751 in 2017 Increased by 7% on Full Year 2016. DIVIDENDS (CENTS) 188 188 187 182 20 2 Full Year 2017 dividends totalled 188 cents per share, unchanged from Full Year 2016. CASH EARNINGS ($MILLIONS) 8,062 7,822 7,820 7,628 7,063 Cash earnings 3% higher. 1. Based on a closing share price on for his shares in the Bank of New South Wales. 2. Special dividends. 2017 2016 2015 2014 2013 2017 2016 2015 2014 2013 174 2017 2016 2015 2014 2013 6,

 


4 WESTPAC GROUP 2017 HIGHLIGHTS Supporting is seeking to create a diverse, high-performing workforce where the best people want to work. employees1 was also required to sleep on the Bank’s premises. Potts served the company for 22 years. in employee payments diversity of our people and includes various styles to suit different climates and preferences. target reached for points In 1934 the Bank’s first uniform was introduced. Only for women, it was designed by Dorothy Davidson, wife of the General Manager at the time, Alfred Davidson. employees Employing 39,011 people, the Westpac Group 39,011 Our first employee was 23-year-old Joseph Hyde Potts who was paid £25 a year and provided a weekly ration to serve as ‘porter and servant’. He $4.7bn In 2017, to mark Westpac’s bicentennial year, a new Westpac wardrobe was introduced. Designed by fashion icon Carla Zampatti, in partnership with over 50% 200 Westpac employees, the collection reflects the women in leadership positions, up from 48% at September 20162 EMPLOYEE ENGAGEMENT 79%10 percentage EMPLOYEES USING FLEXIBLE WORK ARRANGEMENTS 74% 1. 35,096 full time equivalent employees. 2. Women in Leadership refers to the proportion of women (permanent and maximum term) in leadership roles across the Group. It includes the CEO, Group Executives, General Managers, senior leaders with significant influence on business outcomes (direct reports to General Managers and their direct reports), large (3+) team people leaders three levels below General Manager, and Bank and Assistant Bank Managers.

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 5 38,761 cust communities financial relief packages issued natural disasters Westpac Bicentennial Foundation customers and communities. Businesses of Tomorrow that are shaping 112,263 known as Brisbane) in 1850 and our latest branch Total committed exposure to CleanTech income tax Supporting omers provided with hardship assistance via Westpac Group Assist From its first days Westpac has 1,885 always been at the heart of the to customers affected by communities in which it operates, sharing in the highs and lows. $100m is supporting 100 scholars every year When adversity has hit, whether it be flood, fire or in perpetuity hard times, the Bank has been there to support its 200 Australia’s future were recognised Our first branch opened in Moreton Bay (now Participants in financial education was proudly opened, just across the river, in South Bank in July 2017. $7bn and environmental services sector $1.32bn Lending to social and affordable housing sector $164m Community contributions $2.8m Charitable donations by employees, matched dollar-for-dollar by Westpac $3.53bn Capable of funding federal hospital services for almost two years.1 1. Federal Budget 2016-2017.

 


6 WESTPAC GROUP CHAIRMAN’S REPORT LINDSAY MAXSTED It has been an extraordinary year for your company, with some significant highs and some challenging lows. Westpac’s 200 year anniversary was the highlight, marking an important milestone for your company, and for Australia. Few companies globally have reached this significant milestone and to do so with perhaps our strongest ever balance sheet, sound returns, and as the world’s most sustainable bank, is something shareholders can be very proud of. The low for the year has been the further deterioration in the industry’s reputation and the imposition of a new Federal Government bank levy (Bank Levy) that has impacted both the value and the returns from your investment in Westpac. I will speak further on this below. 2017 performance Our financial performance this year was sound with statutory net profit up 7%, lifted by good growth across our banking businesses and a gain on the further sell-down of our investment in BT Investment Management of $279 million. Cash earnings (our preferred measure of performance) for the year ended 30 September 2017 was up 3% compared to 2016. Growth across lending, deposits and funds under administration was sound with margins lower, mostly in the early part of the year. As a result, net interest income was 2% higher although growth was reduced by the Bank Levy, which became effective from 1 July 2017. The Bank Levy had a $95 million impact on revenue and reduced cash earnings by $66 million, or around 1% for Full Year 2017. We have reached our 200th year with perhaps our strongest ever balance sheet

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 7 Non-interest income, was a little lower over Full Year 2017 (less than 1% down) with a strong performance from our financial markets business early in the year, partially offset by lower wealth and insurance income, and a provision for customer payments. The 2% growth in net interest income combined with the small decline in non-interest income led to a 2% rise in net operating income. Expenses also increased 2% over the year. The rise was mostly associated with investment in the business and rising regulatory and compliance costs. Ordinary expense growth (mostly inflationary increases) was largely offset by $262 million in productivity improvements. The Group’s improved financial performance and excellent strategic progress contributed to a rise in short term incentives payable to key management personnel this year. The Board considered that, overall, performance across a range of measures exceeded documented expectations. The Board also considered how the executive team responded to the sector’s reputation issues. Longer term incentives did not vest this year as the stretching hurdles set by the Board when the incentives were first issued in 2014 were not achieved. These long term incentives would typically comprise around one third of an executive’s remuneration. Capital From a capital perspective, 2017 has been an important year for the Group. After a 10-year process we have achieved a level of capital that our regulator, the Australian Prudential Regulation Authority (APRA), considers to be ‘unquestionably strong’. Our common equity tier 1 capital now stands at 10.6%, more than a full percentage point higher than a year earlier. If we convert this on a like-for-like basis with international peers, it places us comfortably in the top quartile of banks globally. APRA has consistently sought to be ahead of global regulatory trends and this saw a Liquidity Coverage Ratio introduced in January 2015, with a new Net Stable Funding Ratio coming into effect from 1 January 2018. Today, Westpac has ratios of 124% and 109% respectively, ahead of the 100% benchmarks for both. We are now materially stronger on both capital and liquidity in absolute terms and relative to global peers. Of course in banking you can never be complacent on strength, but it should be of comfort to shareholders that these ratios are some of the best in the world. Building strength however comes at a cost—increasing shareholders’ equity, lifting shares on issue and holding additional liquid assets all impact returns. More specifically, with the increase in shares on issue, our cash earnings per share of 239.7 cents was up 2% over the year while the Group’s return on equity (ROE) was 13.8%, marginally down from 14.0% in 2016. A further consequence of building strength is that the Group has held dividends unchanged over recent halves. Dividends This year the Board has determined a final dividend of 94 cents per share, which is unchanged over the prior half and over the final dividend for 2016. This brings the full year dividend to 188 cents per share, unchanged from 2016. Impairment charges were significantly lower this year, down $271 million or 24%. The lower charge reflects the high quality of our loan portfolio and the successful work-out of some large stressed facilities. In our assessment of Westpac’s performance for the year, the Board was pleased with both overall financial outcomes and progress on the Group’s strategy. Strategically there have been further developments on the digital transformation of the organisation, stronger customer satisfaction results, another significant reduction in complaints (down 18% in Australia and 21% in New Zealand) and a lift in employee engagement—all good indicators of the strength of the Group’s franchise and value. There is a similar story on liquidity. Over the past 10 years our liquid assets have increased more than fourfold to $138 billion at 30 September 2017.

 


8 WESTPAC GROUP CHAIRMAN’S REPORT Being the world’s most sustainable bank is something shareholders can be very proud of In setting the dividend the Group seeks to maintain a payout ratio that is sustainable over the long term. That is, we aim to retain sufficient capital for growth and to maintain an unquestionably strong capital position. At the same time, we seek to maximise the distribution of franking credits. The impact of the Bank Levy (which cost an equivalent of 2 cents per share) was also considered. The final ordinary dividend represents a payout ratio of 79%. The 94 cents represents a dividend yield of 5.9% based on the closing share price at 29 September 2017 of $31.92, or a yield of over 8% after adjusting for franking. The final ordinary dividend will be paid on 22 December 2017 with the record date of 14 November 2017. Board changes There were two changes to the Board over the year. As discussed in last year’s report, after an outstanding 10-year tenure, Elizabeth Bryan retired at the conclusion of our 2016 Annual General Meeting (AGM). In September 2017, we were pleased to announce the appointment of Nerida Caesar to the Board. Nerida was most recently the CEO of Equifax, formerly Veda, in Australia, and brings with her a wealth of experience in technology and innovation. After the end of the financial year we announced that Robert Elstone will be retiring following the 2017 AGM. Robert has been an exceptional director in his six years on the Board; he has a sharp mind, an attention to detail and an ability to distil issues and focus on what is important. In a period of heightened global volatility, having a financial markets specialist such as Robert has also been an asset to your Board. Succession planning for new directors is a regular item on the Board’s agenda and discussions with new potential candidates are ongoing. As a result, we anticipate the appointment of one or two new non-executive directors to the Board in 2018. Potential appointees are expected to add strength and diversity to your Board. Banking on trust Last year I spoke about the important role Australia’s banks play in the economy, and society, and the overwhelming benefits they have brought. At an economic level, banks support Australia’s investment requirements and facilitate the efficient flow of much-needed foreign capital. At a micro level, banks not only back individual customers and businesses to help them meet their financial goals, they facilitate the efficient flow of funds around the economy. It has been globally acknowledged that Australia and New Zealand have been well served by their major banks, both during and since the Global Financial Crisis (GFC). You need only look at other global markets such as the UK, parts of Europe and the US to appreciate the devastating impact poorly performing banks can have on customers and economies over extended periods. Unfortunately the strength of our banking sector is not always recognised domestically. In my report last year I sought to address some of the banking ‘myths’ that have continued to feature in commentary on the sector. However, unfortunately, the quality of debate regarding banks has not improved during the year. It is clear that some of the criticism of the Australian Banks is warranted. There have been times over recent years when issues surrounding the quality of financial advice; the treatment of insurance claims, and the quality of lending and/or enforcement decisions have not been consistent with putting the customer first and/or acting in their best interests. As a Bank, and an industry, we have also underestimated the intensity of community, regulatory and government reaction to the matters where expectations have not been met. At the same time, the over reaction by many in leadership positions has been unhelpful and unnecessarily raised the level of concern in the community relating to trust in the sector. In part this is why many people respond to the question that they trust their banker but don’t trust Banks. Having said that, let me also be perfectly clear that the Board and management at Westpac understand we must act. We have to take more responsibility and lift our standards to an even higher level—and we are. Brian will talk to developments further but I can say that the Board is fully behind these initiatives which essentially involve getting it right for the customer the first time and, in those cases where we fail to do so, calling out the issue and remediating promptly and appropriately.

 


 

2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 9 CASH PER SHARE CASH ON EQUITY NET EXPENSE The Bank Levy I wrote to shareholders when the Bank Levy was first proposed, to make our position clear and seek your feedback and support. I want to thank the many shareholders who responded and those who also shared their views more broadly, including with their local Members of Parliament. The Bank Levy is now in place, but we must continue to agitate for its removal. It is a highly inefficient and distortive tax that places an impost on a small number of Australia’s largest taxpayers. It discriminates against Australian banks relative to global peers and it has impacted the value of your investment and the investments of millions of superannuation holders across Australia. Australia’s oldest company It has been a privilege to be Chairman of Westpac in its 200th year. 2017 has been a special time for the company and its people, and it has given us the opportunity to reflect on what has been behind our success and our legacy for the future. We have created the Westpac Bicentennial Foundation, and the Businesses of Tomorrow program, and we have increased community sponsorship. Through each of these initiatives we have created a stronger connection with the markets in which we operate. And in so doing we have created a stronger foundation for your company’s future success. CAPITAL STRESSED TIER 1 RATIO (%) COMMITTED (%) (CENTS PER *special COVERAGE TOTAL SHAREHOLDER RETURN WESTPAC ASX ALL ORDINARIES 8.5% 23.5% 61.6% 34.6% 14.5% 17.4% 66.8% 70.3% 1 YEAR 3 YEARS 5 YEARS 10 YEARS Source: IRESS 2015 2016 2017 121 134 124 2013 2014 2015 2016 2017 1.60 1.24 0.99 1.20 1.05 2013 2014 2015 2016 2017 2.15 2.08 2.08 2.13 2.09 2013 2014 2015 2016 2017 227.8 245.4 248.2 235.5 239.7 13.8% 12.3% 13.3% 15.3% 20* 2013 2014 2015 2016 2017 9.1 9.0 9.5 9.5 10.6 2013 2014 2015 2016 2017 41.3 41.7 42.1 42.1 42.2 15.9 16.4 15.8 14.0 13.8 2013 2014 2015 2016 2017 PERFORMANCE METRICS CASH EARNINGS BASIS EARNINGS EARNINGS RETURNS ORDINARY RETURN (CENTS)(%) MARGINS EFFICIENCY INTEREST TO INCOME MARGIN (%) RATIO (%) ASSET QUALITY ASSETS COMMON TO TOTAL EQUITY EXPOSURES CAPITAL DIVIDENDS LIQUIDITY SHARE) RATIO (%) dividends RETURNS OF WESTPAC AND ASX SEGMENTS 2017 (RETURN ON EQUITY) Westpac Market ex Resources Industrials Australian companies with international earnings Source: Macquarie Securities 2014 182 2015 187 2016 188 2017 188 2013 174

 


10 WESTPAC GROUP CHAIRMAN’S REPORT Westpac is committed to supporting customers and creating a better future for all Australians and New Zealanders SHARING RETURNS WHERE WESTPAC’S REVENUE1 GOES $6.3bn Dividends – paid to our 630,000 shareholders Around 80% of dividends are paid to Australians through retail and industry super funds, institutional investors and individual investors including self-managed super funds 29% $4.7bn Salaries – paid to our 39,000 employees Through employee salaries, superannuation and other benefits 22% $4.4bn Expenses – paid mainly to our suppliers Businesses and individuals, mostly based in Australia and New Zealand 20% $3.5bn Tax – capable of funding federal hospital services for almost two years With a tax rate of 30.4% Westpac is Australia’s second largest tax payer 16% $0.9bn Loan impairments – to cover bad debts $1.8bn Reinvested – to fund future growth Supporting future lending 4% 9% $21.6bn 2017 REVENUE 1. Revenue is net operating income and comprises net interest income and non-interest income on a cash earnings basis. This is before expenses, impairment charges and tax.

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 11 It was a real highlight for me to share memories with shareholders, current and past employees, and some of Westpac’s great leaders over the last 30 years. It was a particular pleasure to connect with, and speak to, our last five CEOs, and the last four Chairmen. We had some great discussions and it is very clear what a great love all these leaders had, and still have, for your company. While each leader brought unique skills and experience to Westpac, what stood out for me was how aligned they were in their view on strategy and their focus on customer service. And so as the baton passed between these CEOs it was invariably a seamless transition. I strongly believe that this consistency of long-term strategy has played a vital role in your company’s success. Outlook We remain very positive about the Australian and New Zealand economies. Both markets have strong fundamentals with solid GDP growth, low unemployment and controlled inflation. These trends are expected to broadly continue in the year ahead with Westpac Economics expecting Australia’s GDP growth to be 2.5% in 2018. We anticipate that growth will be supported by an ongoing contribution from exports of resources and services along with higher public spending, including for infrastructure and private non-residential construction. We are however expecting growth to slow through the year as the construction cycle peaks and weak income growth continues to weigh on consumers. Looking ahead, these settings combined with a further tightening of credit standards and regulatory limits on elements of mortgage growth, will likely lead to slower growth in lending and deposits in 2018 relative to 2017. Our financial settings are in good shape but we will be subject to the full period impact of the Bank Levy in 2018. Asset quality is expected to remain sound in the year ahead and, while there are no signs of material concern, we will remain vigilant, consistent with our low risk approach. Summary It has been a landmark year for Westpac. The success we have achieved, the strength in our balance sheet and the positive momentum across the Group means we are well positioned for the future. As we begin our third century, our biggest challenge lies in rebuilding our reputation across the communities in which we operate. If we are to continue prospering in the period ahead, we must actively demonstrate the value we bring to society and the value we bring to customers every day. We will continue to improve on service delivery; genuinely listening to customers and putting them at the centre of everything we do. That’s why our service strategy is so important. One of the key things our 200th anniversary has shown me is the passion and commitment of the people of Westpac to supporting our customers and creating a better future for all Australians and New Zealanders. It is this passion and commitment that has seen us through the highs and lows of the past 200 years and continues to drive us forward and helps us continue to deliver sustainable returns for you, our shareholders. To mark our 200 years we also published a book filled with stories about the bank, its people and customers. It is a great read and I encourage you to see the online version on our website. LINDSAY MAXSTED Chairman Westpac Group From left to right, Former Westpac CEOs Bob White AO, Frank Conroy AM, Bob Joss AC, David Morgan AO and Gail Kelly and current Westpac CEO Brian Hartzer.

 


12 WESTPAC GROUP CEO’S LETTER BRIAN HARTZER Dear fellow shareholders, 2017 has been a landmark year for the Westpac Group. As CEO, it has been an immense honour to lead this company through our 200th year and into our third century of business. At events across the country, and in many of our overseas offices, I have had the pleasure of speaking with thousands of our customers, community partners, and staff members. It has given me—and I know many of our people—a tremendous sense of pride in this company and the role it has played in the lives of so many Australians and New Zealanders throughout its history. There were many special moments during these events. As a history ‘tragic’, a particular highlight for me was meeting Bill McRae, a former employee who served as a Lancaster Bomber Command pilot in the Royal Air Force during the Second World War. Bill joined the Bank of New South Wales in 1929, working in Sydney before our legendary General Manager, Alfred Davidson, sent him to London to help build our business in the UK (Alfred Davidson helped restore Australia’s prosperity during the Great Depression by initiating the devaluation of the Australian pound). Bill shared anecdotes of his time in the Royal Air Force and at the Bank on both sides of the war— including how he was chosen to set up the Bank’s first training academy, thanks to his experience training pilots during the War. I will cherish his stories. This has been an historic year for our company I also enjoyed meeting customers such as the McDonald family from Cloncurry, who have banked with Westpac (or the Bank of New South Wales) since the 1860s. One customer even brought along his ancestor’s Bank of New South Wales passbook from 1827—still proudly passed down as a family heirloom. We are proud of such long-term connections, but few have been longer than our partnership with AGL. For 170 years we have worked together to build their business and create a brighter future (literally) for Australians.

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 13 Another highlight was sharing a stage in April with five of Westpac’s former leaders: Gail Kelly, David Morgan, Bob Joss, Frank Conroy, and Bob White (who sadly passed away in June). As the Chairman writes in his letter, it was extraordinary to have some of the great minds of Westpac all in one place. To put it in perspective, since 1992 these executives have presided over an increase in the value of your bank from just less than $5 billion to over $108 billion today—the total shareholder return over that time averaging 13% per annum. There aren’t many companies of our size who could get such an unbroken chain of former leaders together; and each of them provided interesting insights from their time as CEO and observations about today’s business. What really struck me though was the consistency of their message over time—the focus on customers, the importance of a strong balance sheet and inclusive culture, and their pride in Westpac’s broader role in the community. It was also pleasing to hear each of them endorse our ‘Service Revolution’ as the natural extension of these principles and the right strategy for today. Bringing our vision to life As I’ve described in previous letters, our ‘Service Revolution’ strategy is designed to bring to life our vision “To be one of the world’s great service companies, helping our customers, communities, and people to prosper and grow”. Our strategy has remained consistent over several years now, and I’m pleased to report that we’ve continued to build momentum and deliver projects against each of the five priorities that comprise the strategy: Performance disciplines, service leadership, digital transformation, targeted growth, and workforce revolution. Customers like Ian Peterson from Airlie Beach in Northern Queensland who we have supported for many years but never more critically than in the aftermath of Cyclone Debbie. We recognise that our industry, like the economy as a whole, is currently undergoing a period of substantial change. That’s why our primary focus as a management team is on transforming the company—through the ‘Service Revolution’ program—to make sure we can continue to compete and grow value successfully over the medium-to-long term. In summary then, our long-term strategy to create value is to: • Maintain a strong balance sheet and conservative risk appetite, focused on serving our home markets of Australia and New Zealand; • Increase the size of our customer base, through the development of our multiple brands and well-targeted segment marketing strategies; • Extend the duration and deepen those relationships by delivering world-class service and using our digital assets to encourage people to consolidate their business with us; • Reduce costs and fuel innovation by consolidating and modernising our technology platforms and forming partnerships with selected fintech companies; • Continue to develop a highly-engaged, inclusive culture and sustainable work practices that help us to attract and retain the best talent in our market; while • Continuing to deliver a disciplined performance, year-in and year-out, in order to maintain the shareholder support for the longer-term investments that we are making. With this in mind, let me turn now to our 2017 performance. AGL AND WESTPAC A 170 YEAR PARTNERSHIP Westpac’s partnership with AGL began in 1847, not long after the introduction of Sydney’s first street gaslight, when we became the company’s official banker. It’s a partnership that has stood the test of time, evolving and growing over the years, most recently with the establishment of an investment fund focused on the Australian renewable energy space—the first of its kind in Australia. The Powering Australian Renewables Fund, PARF, provides investment opportunities in a portfolio of renewable energy assets and Westpac has once again been there from the beginning as a key financier on all the PARF deals. The two companies not only share a long financial history but also a commitment to moving to a low carbon economy. On 24 May 1841, the young Australian Gas Light Company (known today as AGL) turned on the first street gaslights in Sydney. Within two years the city had 165 gaslights, including number 18, which was located outside our head office in George Street. In 1847 we became the official treasurer to the Australian Gas Light Company and in 1853 became a customer when it was agreed to light the Bank’s interior and outer courts and back lane with gas. To read more about these stories please go to 2017annualreport.westpacgroup.com.au At its heart, this strategy recognises that we’re a service business, not a product business—which means that our core purpose is to help customers achieve what’s important to them. For shareholders, this means that we create value by building long-term relationships with our customers—supporting them through thick and thin. Top image: Brett Redman, Chief Financial Officer, AGL. Middle image: George Street, Sydney, 1858-1860. Collection of Museum of Applied Arts and Sciences, Sydney. Bottom image: Broken Hill Solar Farm is owned by the Powering Australian Renewables Fund (PARF). Image courtesy of PARF.

 


14 WESTPAC GROUP CEO’S LETTER 2017 performance—an overview At the start of the financial year, with the support of your Board, the executive team and I agreed three over-arching goals for our 200th year: • First, to deliver a strong financial result; • Second, to deliver substantial improvements in service quality for our customers; and • Third, to make material progress on our culture and reputation. Looking back over the year, I’m pleased with the progress on each of these goals— although we’ve clearly got more to do. Financial performance Our financial performance exceeded the internal earnings target that we set at the start of the year. Cash earnings rose 3%, with a 2% increase in operating income, a 2% rise in expenses, and a substantial reduction in impairment charges for bad debts. At the same time, we significantly strengthened our balance sheet, lifting our common equity tier 1 (CET1) capital ratio above APRA’s benchmark for banks to be seen as ‘unquestionably strong’. As these results include the start of the Federal Government’s new bank levy, increased ‘macro-prudential’ lending requirements, and a provision to remediate a number of historical customer issues (I’ll address these shortly), we consider this to be a good result. (Note too that our cash earnings exclude the gain on the sale of shares in BT Investment Management (BTIM) during the period, which benefits shareholders’ equity. This gain is included in our reported statutory profit.) All of our banking divisions performed well, with cash earnings growth of between 4% and 18%. However, earnings from BT Financial Group (BTFG) (our wealth management and insurance business) were 11% down on last year. This was primarily driven by a number of infrequent items, as well as significant incremental regulatory and compliance costs. However, underlying growth in funds under administration, insurance premiums, and lending within BTFG continued to be strong. THERE WHEN YOU NEED US When Tropical Cyclone Debbie made landfall near Airlie Beach, in Queensland, on 28 March 2017, local resident Ian Peterson and his family knew they were well prepared but it was still a long 27 hours as they waited for the storm to pass while sheltering in a shipping container they had prepared for just such an event. When they emerged Ian said it looked like a nuclear bomb had detonated or a bushfire had gone through with not a single leaf on any tree. That was when the recovery process began. Local Westpac Branch Manager, Jane Tissington, helped Ian get access to the emergency funds he needed by getting the branch ATM up and running, and supported the family with their insurance claim so all the damage was quickly repaired. On Christmas Eve 1974, Cyclone Tracy devastated Darwin, killing 71 people, destroying 80 per cent of houses and causing more than $4 billion of damage in today’s figures. 30,000 people were evacuated, however a group of 12 volunteers from the Bank’s Darwin branch stayed on to get the branch up and running again. Within two days they were able to allow customers to withdraw $200 cash per family for emergency expenses. To read more about these stories please go to 2017annualreport.westpacgroup.com.au

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 15 We sold down our shareholding in BTIM this year from 29% to 10%, booking a gain of $279 million. It’s worth reflecting that this has been an outstanding investment for our shareholders, many of whom also participated in BTIM’s initial float back in 2007. The decision to sell down reflects our belief that the future of this business is about ‘open architecture’ platforms that provide customers and advisors with a convenient place to manage all of their money, wherever they choose to invest it. While some of our competitors are increasingly looking to exit their wealth and insurance businesses, we continue to believe that having a strong business in this category will give us an increasing competitive advantage as Australia’s population ages in the years ahead. Within our banking businesses, there were a number of significant dynamics at play this year that are worth highlighting. faster-growing service sectors of health, education, and tourism. However, this was offset by slower growth in areas such as commercial property, trade finance and auto finance, where strong competition from offshore firms has made the returns much less attractive. We substantially increased the strength of our capital position this year as well. Our CET1 capital ratio increased more than a full percentage point to 10.6%, due to business unit profit growth, our dividend reinvestment plan, the further sell-down in BTIM, and better capital efficiency. Although we are still waiting for APRA’s final capital rules, it is satisfying to know that the strengthening of our balance sheet required post the GFC is now nearing its end. Our funding and liquidity position also improved over the year. We’ve grown deposits, reduced our reliance on offshore short-term wholesale funding, and further lengthened the tenor of funding. We also met the new Net Stable Funding Ratio requirements (essentially a measure of our longer-term liquidity position) almost a year before the required 1 January 2018 start date. The combination of all of these factors meant that net interest margin was down 4 basis points over the year, including one quarter’s impact of the Federal Government’s Bank Levy (which reduced the margin by 1 basis point). Most of the margin decline happened early in the year, with the impact of repricing and a greater focus on return leading to higher margins in the second half of the financial year. by the slowdown in mining investment. Fortunately, recent indicators suggest that the worst may now have passed, especially in Western Australia. Non-interest income was a little lower over the year (down $36 million). The Group recorded higher markets income (particularly in the first half of the year), improved business line fees, and good funds management and insurance flows—however these gains were offset by regulatory reductions to credit card interchange fees as well as provisions for customer payments that totalled $169 million (most of which was included in non-interest income). Operating expenses grew 2% over the year, which was at the lower end of the 2-3% medium term range that we expect—a good result. In a challenging revenue environment, our goal continues to be to offset business-as-usual expense growth with productivity savings. This year we generated $262 million in productivity savings—equal to around 3% of our cost base—and removed over 900 roles. Some of the productivity initiatives we completed this year included: • Launching new mobile banking features to help customers do their banking on the go; • Installing new call centre technology that speeds up customer ID verification and provides better functionality to our call centre team members to help serve customers better; • Streamlining organisation structures and ‘spans of control’; and • Consolidating head office locations and transforming them into more flexible workspaces. Thanks to initiatives like these, the overall 2% rise in expenses was largely driven by investments we are making in our strategic agenda, along with some increases in cost for regulatory and compliance activities. The cost to income ratio for Full Year 2017 was 42.2%, which puts us among the most efficient banks in the world, and we remain committed to taking this ratio below 40% over the next few years. The first was in Australian mortgages, where APRA extended its requirements for banks in ways designed to improve the resilience of the sector to a potential downturn or substantial increase in interest rates. Specifically, we were required to maintain investor mortgage growth to less than 10% per year, and to reduce the proportion of new mortgage lending with an interest-only option to below 30%. Through a combination of pricing and other actions, both of these targets were met: Investor mortgage lending grew at around 6%, and the proportion of interest-only lending for the September 2017 quarter was 26%. However, the consequence of these and other changes on loan serviceability assessments was that our overall mortgage lending grew a little slower than the overall financial system this year—a result we were comfortable with. Asset quality remained strong during the year, with the ratio of stressed assets to total committed exposures (TCE) declining 15 basis points to 1.05%, and a significant reduction in credit impairment charges over the year. This reflects both a reduction in new impaired assets along with the work-out of a small number of larger impairments during the year. Mortgage delinquencies have also been sound with little change over the year— although we are monitoring Western Australia and regional Queensland closely, as these regions continue to be impacted Looking at our balance sheet more broadly, we continued to prioritise strong growth in deposits while limiting growth in lending to where returns remain attractive. Total deposits were up 4% for the year, with high quality household deposits growing faster than the financial system. Overall loans grew 3%, with strong growth in small and medium business as well as the

 


16 WESTPAC GROUP CEO’S LETTER At a cash earnings level, 3% growth in cash earnings translated to a 2% increase in earnings per share—mostly due to the impact of additional shares issued under the dividend reinvestment plan. What this highlights is that higher capital levels come at a cost: With increased capital during the year contributing to a 22 basis point decline in return on equity (ROE) to 13.8% (although that level remains within the 13% to 14% band the Group is seeking to achieve). Customer performance The best assessment of whether we are achieving our goal of becoming one of the world’s great service companies comes from our customers and, given the size and scope of our businesses, we look at a number of different customer feedback measures to help us evaluate our performance. Although any sample-based survey of customer feedback has its drawbacks, one of the best overall measures is the Net Promoter Score (NPS), which looks at the relationship between customers who are advocates for the bank versus customers who are detractors of the bank. Pleasingly, the NPS of our consumer banking business has gradually improved over the year, moving from the bottom of our major bank peer group 12 months ago to being ranked first in September 2017. Another measure we track is the volume of complaints we receive, and the relationship between those complaints and the compliments received over the same period. This year customer complaints across our Australian operations fell 18% compared to Full Year 2016, continuing a trend that we’ve seen for the last several years. Meanwhile compliments received by our branch network outnumbered complaints by 3.5 to 1, improving from 3 to 1 last year. Few things frustrate customers more than not having services available when they need them. This year, improvements to our infrastructure have led to a material reduction in system downtime: In the first half of Full Year 2017 we recorded five ‘severity one’ incidents (system outages with a significant customer impact) in Australia— and we had no such outages in the second half of the year. This compares with 19 such incidents in the previous year. DIVISIONAL CONTRIBUTION TO WESTPAC GROUP CASH EARNINGS $ 8,062m CONSUMER BANK Sales and service to consumer customers in Australia $3,104m BUSINESS BANK Sales and service to small-to-medium enterprise, commercial and agribusiness customers $ 2,099m BT FINANCIAL GROUP Westpac’s Australian wealth and insurance business $771m WESTPAC INSTITUTIONAL BANK Sales and service to commercial, corporate, institutional and government customers $1,304m WESTPAC NEW ZEALAND Sales and service of banking, wealth, and insurance products for consumer, business and institutional customers across New Zealand $916m1 1. NZ$970m

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 17 FINANCIAL PERFORMANCE MOVEMENT IN CASH EARNINGS 271 (177) Westpac’s 3% increase in cash earnings was mainly due to good balance sheet growth combined with a 24% reduction in impairment charges. Net interest income was 2% higher over the year with most of the growth due to an increase in housing lending and a 4% rise in customer deposits. Business lending was more subdued with an increase in facilities to small and medium enterprises partially offset by a reduction in commercial property and asset finance where returns were lower. Margins were 4 basis points lower over the year with continuing strong competition across both lending and deposits. Non-interest income was down with a lower contribution from credit cards and wealth offset by stronger markets income. Most of the 2% rise in expenses was due to higher investment and increased regulatory and compliance costs. Impairment charges declined by $271 million as asset quality continued to improve. The improvement was due to fewer new impaired assets emerging over the year along with more companies returning to fully performing. 356 (36) (174) 8,062 7,822 3% Full Year 2016 Net interest income Non-interest income Expenses Impairment charges Tax and non-controlling interests Full Year 2017 $millions INTEREST RATES AND FUNDING $427bn AUSTRALIAN HOME LOANS In funding loans to customers, Westpac draws from three main sources: customer deposits, wholesale funding and equity. The rates we pay on each of these sources of funds is determined by market forces within each category. While the Reserve Bank of Australia’s cash rate is a market indicator, banks do not borrow money at that rate. Moreover, the relationship between the cash rate and the rates we pay over time varies. Prior to the GFC for example term deposit rates were generally below the cash rate. Today, those taking out a term deposit can often receive a rate well above the cash rate. We set our lending rates based on our funding costs, ensuring we earn an appropriate return for shareholders and for the risk we take when we lend money. It is a balancing act and we need to consider the needs of borrowers, depositors and shareholders. We understand that these decisions impact people but feel we achieved the right balance with margins declining 4 basis points this year. $151bn AUSTRALIAN BUSINESS LOANS $ 22bn AUSTRALIAN ANS PERSONAL LO NEW ZEALAND $71bn $ 685bn LOANS TOTAL LOANS $ 14bn OTHER OVERSEAS LOANS 2017 FUNDING MIX 62% 30% 8% $ 787bn 1 + + WHOLESALE CUSTOMER FUNDING DEPOSITS – SHORT TERM SHARE-HOLDERS EQUITY $62bn2 – TERM DEPOSITS – SAVINGS $487bn – LONG TERM – SECURITISATION $238bn 1. Funding mostly for loans and liquidity.2. Excludes some reserves. Lending up 3% Customer deposits up 4% Margins down 4bps Lower credit card fees and wealth income Costs up 2%, mostly higher investment and regulatory and compliance costs Improved asset quality Effective tax rate at 30%

 


18 WESTPAC GROUP CEO’S LETTER OUR VISION STRATEGIC PRIORITIES To be one of the world’s great service companies, helping our customers, communities and people to prosper and grow PERFORMANCE DISCIPLINE Managing our business in a balanced and disciplined way to be recognised as the region’s best-performing bank SUSTAINABILITY PRIORITIES SERVICE LEADERSHIP Through our service revolution, help customers achieve their goals EMBRACING SOCIETAL CHANGE Help improve the way people work and live as society changes DIGITAL TRANSFORMATION Continue to invest in digitisation and use technology to redesign and enhance the customer experience ENVIRONMENTAL SOLUTIONS Help find solutions to environmental challenges TARGETED GROWTH Direct investment towards the areas that offer the greatest growth including wealth and SME BETTER FINANCIAL FUTURES Help customers have a better relationship with money WORKFORCE REVOLUTION Employ and retain the best people with a culture that helps them succeed

 


 

2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 19 This year we’ve deliberately prioritised strength and return over growth to reshape the balance sheet Improvements in our technology and processes are reinforced by the Our Service Promise program, a Group-wide initiative that defines excellent service for our people and reminds them to incorporate this mindset into action every day. The program is fundamental to our efforts to build a genuine service culture, and it’s working. Across the Westpac Group I regularly see examples of our people taking the initiative to solve a customer’s problem, to find creative ideas that help our customers to thrive financially, and to build genuine long-term relationships. It’s also important that I, and my leadership team, support our people to deliver that high standard of service. So this year we’ve worked to reduce roadblocks for our people and free up more time for them to spend with customers: We’ve digitised time-absorbing tasks, improved the usability of staff tools, and reduced the number of products on offer—making it easier for our people to recommend the right product and navigate our processes. In our Consumer Bank, we’ve also removed product-based sales incentives for our front line tellers and personal bankers, replacing them with service-based metrics. This means that our people are now more empowered to deliver better service to customers and indeed are explicitly rewarded for doing so. Culture and reputation As a service business in a highly competitive market, the quality of our people and culture is a major determinant of our success. That’s why we’re so focused on making the Westpac Group attractive to the best bankers in the market, and creating an environment where those people can do their best work. The 200th anniversary gave us the opportunity to remind our people of the role our company has played—and continues to play—in helping our customers and Australia/New Zealand as a whole to thrive. As a result, we’ve seen a significant increase in staff pride over the year. This— along with investments we’ve made in our people’s skills, leadership training, and a variety of community and sustainability initiatives during the year—has led to a significant increase in staff morale, as measured by our employee survey. We recognise careers are changing and we’re supporting our people to develop their skills and embrace new opportunities. Johanne Parniczky is a great example of this. From a former career as a commercial pilot, Johanne is bringing a fresh perspective and innovation to our organisation as a change director on one of our biggest technology infrastructure programs. On our preferred measure of ‘staff engagement’, we saw a 10 percentage-point increase over the year to 79%. This is above the global high-performance benchmark for large companies, and a remarkable increase in a year for a company with over 39,000 employees. As well as investing in our people’s skills, we continue to work hard to make sure the culture is one where everyone feels welcome and supported. Our 2017 Sustainability Performance Report sets out a number of the initiatives we undertook this year, but one milestone deserves special mention: In 2017 Westpac reached its target of having 50% of its leadership positions held by women. Of course, we have more to do to ensure diversity is better reflected across the organisation, but this is a significant achievement. Improving our reputation It’s no secret that bank reputations have been under scrutiny over the past few years, and Westpac has not been immune. Given the amount of media attention this has received in recent months, I’d like to make a few observations about the causes of this situation and what we’re doing about it. There are a number of causes, starting with missteps by the banks themselves— including Westpac. These include high-profile incidents around poor financial advice, denied insurance claims, poor service, loose or inadequate risk controls, and allegations of inappropriate staff behaviour. Although many of these incidents have been specific to individual institutions, in the current environment each one affects the reputation of the industry as a whole.

 


20 WESTPAC GROUP CEO’S LETTER Compounding these issues has been a significant step-up in community expectations and regulatory intervention. This has meant that some policies or business practices that were acceptable in the past no longer pass muster. At the same time, the volatile political situation in our State and Federal Parliaments means that issues which would previously have been dealt with by the appropriate regulator are now attracting attention from all sides of politics. The banking sector is working hard to address these concerns and has nearly completed implementing a six-point action plan that addresses issues like sales incentives, complaint handling, support for whistle-blowers, and the removal of individuals from the industry who breach the law or codes of conduct. Westpac is fully committed to this effort and has completed its work on five of the six points (the final point, a re-write of the Code of Banking Practice, should be finished next month). In Westpac’s case, we have participated in a large number of formal reviews this year by our various regulators and political bodies, covering topics such as financial planning, insurance, superannuation, mortgage lending and pricing practices, credit cards, systems stability, and anti-money laundering. The Australian Securities and Investments Commission (ASIC) has also initiated various legal proceedings against us, alleging we manipulated the bank bill swap rate (BBSW), provided inappropriate financial advice through our ‘scaled advice’ phone channel, and breached our responsible lending obligations. Our principle is to accept responsibility when we have done the wrong thing, but in each of these cases we disagree with ASIC’s position and are defending our actions. Regardless of the merits, the reality is that the industry has a significant challenge ahead to rebuild its reputation. In particular, we need to address the perception that we put our own needs ahead of those of our customers. OPENING THE DOOR TO NEW CAREER OPPORTUNITIES Westpac employee Johanne Parniczky has undertaken a significant career change, with her current role as Change Director for one of Westpac’s biggest technology infrastructure programs, after 25 years in the aviation industry. Johanne never envisaged her dreams of being a pilot would lead her to banking but she has been amazed just how transferrable her skills were between the two industries. It is expected that today’s 15-year-olds will likely navigate 17 changes in employer across five different careers and Westpac is leading the way with continuous learning opportunities to enable employees to soar high into the future. In 1898, 16-year-old Tennyson Beatrice Miller and 40-year-old Edith Lamb became the Bank’s first female employees. Employed as ‘lady typewriters’, they had an office separate from the rest of the premises and were not to be seen or heard. In a letter to management in 1907, to prove their worth, Edith described the work as ‘distinctly stultifying’ and they were eventually given more challenging tasks. To read more about these stories please go to 2017annualreport.westpacgroup.com.au

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 21 to seek a fair and balanced outcome for their complaints. Our new Customer Council and the new Stakeholder Advisory Panel are both designed to help us better understand customer and community views and identify areas where we could do better. We have also taken steps to encourage our people to speak up when they see something that isn’t right, including a new anonymous phone line and additional protections for whistle-blowers. As a result, we have seen a significant (up 10%) increase in employees confirming they feel it is ‘safe to speak up’¹. The current level of public and political scrutiny is likely to continue for some time. Hopefully you can see from the initiatives above that we are committed to taking actions that will address the substantive issues over time. Creating a sustainable future One of the highlights of 2017 was retaining our position as the most sustainable bank globally in the Dow Jones Sustainability Index (DJSI). This was the fourth year in a row and 10th time overall that Westpac has achieved the global banking sector’s leadership position. The DJSI assesses companies on a range of criteria including corporate governance, codes of conduct, HR practices, community involvement, and environmental policies. Getting it right and—when we don’t— putting it right Across the bank we are proactively reviewing our products and services and the way we have engaged with our customers. I call this program ‘Get it Right/ Put it Right’. The idea is to make sure that we align all of our products and services with our customers’ interests, while making them simpler, fairer, and more transparent. And, where we uncover an issue that we need to put right, we ensure that no customer has been disadvantaged from these past practices. This work has already led to a number of important changes and actions. We’ve introduced our new Westpac Lite credit card, with an interest rate of 9.9% p.a.—the first card of its kind in the Australian market. We’ve also reduced everyday transaction fees on our ‘legacy’ personal transaction accounts, and removed ATM withdrawal fees when non-customers use one of our ATMs. Our reviews of our superannuation disclosure resulted in payments to some customers with pre-existing conditions who did not have the benefit of our improved disclosure practices. Similarly, we identified that for some product packages sold in the past, customers did not receive all the benefits to which they were entitled—and we’re now going back and rectifying the error for each affected customer. We’ve also automated these benefits so this can’t happen again. Based on what we know now, we believe we have dealt with the most significant of these issues in our 2017 result. However, these reviews will continue for some time and it is possible that more issues will emerge that we need to address. In any event I am confident that this is the right approach to put our business on a more sustainable footing. In November last year we appointed Adrian Ahern, a highly respected former senior lawyer, as our first ‘Customer Advocate’. Mr. Ahern reports through to me separate from our businesses, and is thus an independent avenue for customers WAKATU—HE TAONGA TUKU IHO A BUSINESS OF THE LAND AND SEA Wakatu Incorporation is intrinsically linked to the land and sea in which it operates. Owned by the descendants of the local area, Wakatu, via its food and beverage company, Kono, is creating exceptional New Zealand produce and exporting it to the world. The benefits of the company’s exceptional growth are flowing back into the local community. It is all part of the 500-year plan. With their long standing commitment to supporting the growth of the Maori economy, Westpac New Zealand has become a trusted adviser to Wakatu, supporting them with banking and investment assistance, enabling them to continue to develop and grow. The Bank of New South Wales (which became Westpac) opened its first branch in Nelson, New Zealand in February 1862. Inspired by New Zealand’s expanding wool industry, the Bank acquired five New Zealand branches from the Oriental Bank in 1861 and went on to open further branches including the one in Nelson. This was the start of 155 years of unbroken representation in New Zealand. A commitment to sustainable business practices is a big part of the culture at Westpac: In fact many of our staff have told me that they were attracted to work at Westpac in large part because of these policies. This year we released an updated Climate Change Action Plan, which attracted significant media and community attention. In our plan we outlined the steps we will take to meet our commitment to helping limit global warming to less than two degrees. This includes our approach to lending to energy-intensive and renewable sectors, reducing our own carbon footprint, and helping Australian households to become more climate-resilient, improve their energy efficiency and reduce their environmental impact. To read more about these stories please go to 2017annualreport.westpacgroup.com.au 1. 2017 Employee Engagement Survey. Top image: Kerensa Johnston, Chief Executive Officer, Wakatu Incorporation.

 


22 WESTPAC GROUP CEO’S LETTER The feedback we received on our new climate policy was overwhelmingly positive. However I know that there are some shareholders who do not agree with our policy, and who believe that our actions have overstepped the mark. Some of you told us that banks should stay out of the climate debate and just focus on their lending activities. We respectfully disagree, for two reasons. First, it’s important that we assess all the risks associated with any lending proposal, and environmental risks— along with potentially-related government actions—are increasingly a risk in many transactions. Second, we believe it is in the best long-term interest of the economy— and therefore our shareholders—to support a balanced but deliberate transition towards a two degree economy. Preparing for a digital future The final topic I would like to address is how we’re preparing Westpac for the rapidly-arriving digital future. As many of you would recall, 2017 saw the 10-year anniversary of Apple’s iPhone—and it’s astonishing to reflect on how many aspects of our economy and our daily life have changed in 10 short years. The impact of digital technology on banking around the world has been profound, and the changes aren’t close to done yet. In early October, I visited our branch in Shanghai, where the vast majority of customers now use an app on their mobile phone as their main payment device. And two of the biggest payment applications—WeChatPay and AliPay—are operated by companies that aren’t even banks. The threats—and opportunities— created by mobile banking are profound. INSPIRING A GLOBAL TRIBE THROUGH THE POWER OF SOCIAL MEDIA For 24-year-old Cam Greenwood his backyard dream of crafting surfboards has turned into a thriving online surf wear business. Through the power of social media and mentoring support from companies such as Bank of Melbourne, Cam has created Monsta Surf, an online surf wear company that is challenging some of the well established brands in his industry and also creating a tribe of loyal followers who are supporting the company’s ambition to make the world a better place. Westpac has always had a focus on connecting with customers but in the early 1880s, the employees who grasped the opportunity to be among the first commercial users of the telephone were not initially praised for their initiative. The Bank’s general manager at the time demanded to know who had agreed to the telephone’s installation, writing ‘Who authorised the telephone in connection with our business?’ Of course the telephone caught on once it was shown to be efficient and to improve service. To read more about these stories please go to 2017annualreport.westpacgroup.com.au Meanwhile, advances in software development, data storage, and broadband internet mean that so-called ‘cloud computing’ is an increasingly viable tool for large companies to improve efficiency and reduce technology costs.

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 23 At Westpac one of the main reasons we have survived 200 years is that we’ve always been willing to adapt—to changes in the economy, in society, and in technology. So we’re staring straight into these changes and adapting both our customer service and our underlying technology to make sure we stay nimble and competitive—and support our customers to do the same. For example, nimbleness is something we have recognised in Cam Greenwood—a customer who has been leveraging the power of social media to build his online company Monsta Surf. This year we also rolled out numerous technology innovations to customers, including our new wealth platform (BT Panorama), a new corporate lending portal for customers of Westpac Institutional Bank, e-conveyancing for mortgages, cheque digitisation, Lantern Pay (a new payment platform that supports the Government’s National Disability Insurance Scheme), and numerous feature and useability enhancements for mobile banking across all brands. Our Panorama wealth platform has been a highlight. Panorama allows investor customers and their advisors to manage and protect an individual’s wealth and insurance in a simple-to-use, mobile-accessible platform that integrates fully into the Group’s online banking systems. The number of advisers using the platform has continued to grow, with around $4 billion of funds added to the platform—nearly 100% growth over the year. Other major projects delivered this year included a new call centre platform, a new ‘big data’ platform, and the first phase of our new ‘customer service hub’—which will ultimately help us to consolidate the St.George and Westpac back-end systems. We also recognise that much of the innovation and advances in technology will emerge from small fintech companies, and so are working hard to build our links with potential leaders in this arena. To date our Reinventure venture capital fund has made early-stage investments in around 15 fintech startups, giving us an early insight into emerging innovations in data analysis, payments, and digital lending. We have also made direct investments in companies such as zipMoney and Uno Home Loans, which have the potential to serve as important partners in areas that are a related but a bit outside of our core businesses. We must acknowledge that investments in early-stage companies such as these are inherently risky. However we have been very pleased so far with the progress these companies are making. We also find that our involvement gives us valuable exposure to trends in technology and some of the emerging business models with which we will need to compete. Summary As you can see, 2017 has been a huge year for the banking industry, and for the Group. Despite the challenges we faced, I’m proud of our team and what we have delivered for you and the future value of your investment in Westpac shares. I’ll finish by assuring you that we enter our third century in great shape, with a clear strategy, growing momentum, and renewed confidence that we are well on the way to building one of the world’s great service companies. All the best, A RELATIONSHIP BUILT ON TRUST Westpac and Redspear first came together when Redspear was provided business mentoring and support from Westpac’s microfinance partner Many Rivers and, over the past five years, the relationship has grown along with the business. Redspear Safety provides safety and lifting equipment for the oil and gas, mining and construction sectors, something for which co-founder Barry McGuire has always had a passion. The young company says Westpac’s backing enables them to punch above their weight and feel like they can conquer the world. The Bank has a long history of supporting young, innovative companies. Our relationship with Qantas extends back to 1920, several months before the fledgling company took flight. When the company released its official prospectus the Bank of New South Wales was listed as the official banker—and we’re still supporting them today. BRIAN HARTZER Chief Executive Officer Westpac Group To read more about these stories please go to 2017annualreport.westpacgroup.com.au Top image from left to right: Francois Witbooi and Barry McGuire.

 


24 WESTPAC GROUP SUSTAINABILITY LEADERSHIP Sustainable yesterday, today and tomorrow The issues that matter most To ensure we continue to support all our stakeholders we have established a number of channels to gather their feedback and assess emerging trends. This process helps us to better understand stakeholder needs and identify the current and emerging issues that matter most to the people connected to our business. In turn, we are able to direct our efforts and resources to these most pressing emerging risks and opportunities. We have categorised our material issues into the following six themes. SERVICE LEADERSHIP DIGITAL INNOVATION The financial services industry is going through a period of rapid change. Customer needs are evolving (shaped by new technologies), regulation and compliance have increased, and competition is becoming more intense. Our strategy puts service at the heart of everything we do, helping customers achieve their financial goals, at every stage of their life. We are living in a 24/7 digital world. New businesses are emerging and customer expectations are changing. We are embracing the digital opportunity, investing in our mobile and online platforms, our technology infrastructure and our cybersecurity capabilities. At the same time we are fostering innovation by changing the way we work, building partnerships with innovative businesses and directly investing in new fintech opportunities that have the potential to change the financial services landscape. + VALUE CHAIN RISK + WORKFORCE OF THE FUTURE + The size and scale of our business means we have the ability to influence sustainable and ethical practices through our supply chain and the supply chains of our customers and suppliers. This year we have updated and published position statements and action plans on climate change and human rights, and released our Responsible Sourcing Code of Conduct. Children born today are expected to live beyond their 100th year. During this longer lifetime, the nature of work and education is likely to change multiple times. In preparing for these developments we are building a more diverse and highly skilled workforce— with an even stronger service culture— to help us respond to the changing future of work. Our 2017 Sustainability Performance Report contains more detail on how we assess and respond to these issues. The report is available online at 2017annualreport.westpacgroup.com.au. CONDUCT AND TRUST Banks play an important role in the financial system and in the personal lives of customers. Because of this, trust is vital. It is up to all the banks, collectively and individually, to restore public trust and confidence. This year we have stepped up our efforts to rebuild our standing and put it right for customers. POSITIVE SOCIETAL IMPACT As one of Australia’s largest companies we can play an active role in creating positive social, economic and environmental impacts. Our aim is to foster a fairer and more inclusive future for all. Today our actions span across community giving, grants and scholarships, mentoring and education, along with providing banking services (including investment and lending) to sustainable solutions and communities. We believe that as one of Australia’s largest companies it is important that we help to create positive social, economic and environmental impacts in the communities in which we operate. As the first company in Australia to achieve its 200th year, we know the value of focusing on the long term and recognise that the decisions we make today will determine tomorrow. And, while we have a clear strategic direction, it is vital that we continue to adapt, responding to changes in the environment and embracing new opportunities and challenges.

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 25 Sustainability strategy progress OUR SUSTAINABILITY STRATEGY In 2013 we set our five-year sustainability strategy which centres around three priority areas: Embracing societal change Environmental solutions Better financial futures. 2017 marks the final year of that strategy and we have made strong progress, meeting or exceeding 80% of the measures. Highlights of performance follow, with full details, including performance metrics, in our 2017 Sustainability Performance Report. People with Disability, we launched our new 2017–20 Accessibility Action Plan. This plan updates our accessibility and inclusion commitments for customers, employees and communities. This year St.George Bank became the first Australian bank to be accredited as dementia-friendly by Dementia Australia. Change through supply chain This year we exceeded our cumulative target of $3 million supply chain spend with Indigenous owned businesses by 2017, and we have increased our target to $10 million by 2020. Human Rights Position Statement and 2020 Action Plan. With an estimated 45 million people around the world subject to modern slavery, we believe businesses have a responsibility to take action where they can, including through their supply chains. our goal of 50% women in leadership roles by 20171, and exceeded our target of increasing the number of women in general management positions to 41%. Our 2018–20 sustainability strategy will be announced in November 2017 and will be available online at www.westpac.com.au/sustainability. Building the skills for the future This year we offered Australian students free access to maths education through Mathspace, a maths app to help students boost their maths skills. We also launched The Business Institute to help our business bankers continue to develop their skills and expertise. This year we announced our 200th Westpac Scholar through Westpac Bicentennial Foundation. This represents, since 2015, a $12.6 million investment (including contributions from university partners), in individuals who are solving some of Australia’s biggest problems. Supporting cultural diversity To help international students prepare for their move to study in Australia, we shared tips on managing finances on Chinese social media channels, and hosted an educational event for over 200 migration agents with advice and tools to help their clients. WOMEN IN LEADERSHIP1 (%) 2016 48 2015 46 2014 44 2013 42 Indigenous Australian recruitment milestone In 2016 we reached our target of employing 4% of our staff who self identify as Indigenous Australian. In 2017 we maintained this ratio and exceeded our 2015-17 Reconciliation Action Plan commitment of recruiting 500 Indigenous employees by 2017. INDIGENOUS AUSTRALIANS RECRUITED (CUMULATIVE) 2016 451 2015 219 2014 2013 44 42 1. Women in Leadership refers to the proportion of women (permanent and maximum term) in leadership roles across the Group. It includes the CEO, Group Executives, General Managers, senior leaders with significant influence on business outcomes (direct reports to General Managers and their direct reports), large (3+) team people leaders three levels below General Manager, and Bank and Assistant Bank Managers. 2017 target 500 2017 628 2017 target 50 2017 50 Embracing societal change Actions to help improve the way people work and live, as our society changes 2017 INITIATIVES Supporting gender Enhancing our position Inclusion for all equalityon human rights To coincide with The This year we achieved We published our updatedInternational Day of

 


26 WESTPAC GROUP SUSTAINABILITY LEADERSHIP LENDING AND INVESTMENT IN CLEANTECH AND ENVIRONMENTAL SERVICES ($BILLIONS) 2013 6.4 ELECTRICITY EFFICIENCY IN COMMERCIAL AND ) RETAIL SITES (KWH/M2 2,3 Increased commitment 6% improvement in Plan. The plan is consistent to the CleanTech and environmental services sector Our committed exposure to CleanTech and environmental solutions such as renewable energy, green buildings, forestry, energy efficiency and green business initiatives, increased to $7 billion, 16% ahead of our 2017 target. Innovative environmental solutions This year we were selected as the preferred financial partner for the Tasmanian Energy Efficiency Loans Scheme, funding $8.7 million in energy efficient solutions. We also introduced sustainability scoring to BT Panorama allowing customers and advisers to review how their investments on the ASX200 and over 200 managed funds rate on environmental, social and governance factors. electricity efficiency across our commercial and retail sites, exceeding our 2017 target. We also maintained our carbon neutral status for the fourth year in a row. Almost two thirds of lending to electricity generation in Australia and New Zealand was to renewable energy generation sources. with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). It outlines our commitment to helping limit global warming to less than two degrees, including: • Setting a $10 billion target for lending to climate change solutions by 2020 and $25 billion by 2030. • Tighter criteria for financing any new coal mines—financing for any new thermal coal projects limited to existing coal producing basins. Projects must rank in the top 15% globally in terms of coal quality, and actively reduce the emissions intensity of our exposure to the power generation sector over time. 2014 198 2013 200 WESTPAC’S LENDING TO THE ELECTRICITY GENERATION SECTOR—AUSTRALIA AND NEW ZEALAND (% OF TOTAL) 80 70 60 50 40 30 2011 2012 2013 2014 2015 2016 2017 Renewables Non-renewables 1. From 2015, a higher threshold was used for green buildings, in line with property industry trends, accounting for the majority of the change from the previous year. 2. Electricity efficiency, electricity usage and GHG targets include all Australian and New Zealand commercial and retail properties only. Excludes ATMs, stand-alone data centres and fleet vehicles. 3. Rebased in 2015 to align boundary and methodology used in New Zealand to be consistent with Australia. 2017 target <181 2017 169 2016 180 2015 193 2017 target Up to 6.0 2017 7.0 2016 6.2 2015 6.11 2014 8.0 Environmental solutions Actions to help find solutions to environmental challenges 2017 INITIATIVES Enhancing our position Firsts in climate bonds Reduced our on climate change We issued our first offshore environmental footprint Following extensiveforeign currency ClimateWe achieved our 75% stakeholder engagement Bond for US$50 million,waste to recycling target and the scenario planning a first among Australianin Sydney head offices analysis conducted in 2016,banks, and published our following improvements in we announced our third first Westpac Climate Bond waste sorting, site audits and Climate Change PositionImpact Report.increased screening. At the Statement and 2020 Action same time we achieved a

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 27 NET BASIC BANKING ACCOUNT CUSTOMERS IN THE PACIFIC (# CUMULATIVE) 2015 292,374 2013 147,392 than anticipated and finding first Financial Inclusion Delivered financial literacy challenging. This will be a vision and guiding priorities through face-to-face LENDING AND INVESTMENT IN THE SOCIAL AND AFFORDABLE HOUSING SECTOR ($BILLIONS) Indigenous Australian access in the Pacific In a joint venture with the Pacific Financial Inclusion Program, we launched Choice Wantok, an initiative to create new ways of offering banking services to people in remote areas of PNG. Evolving our products and services To meet the changing needs of customers, this year we introduced a number of new products and services. This included savings products with our Westpac Life and Westpac Bump accounts, and a new basic credit card, Westpac Lite, with an interest rate of 9.9%. To help customers following a loss, we introduced new bereavement support resources on our websites as well as bereavement customer guide booklets. customers This year we made available close to $475,000 in microfinance loans with Many Rivers Microfinance to support Indigenous business owners, and committed to supporting at least 110 small Indigenous businesses a year to 2019. Our Indigenous Business Banking team conducted more than 33 community visits to assist customers build their financial knowledge and skills. 2015 1.02 2014 0.82 2013 0.65 Financial hardship In 2017 our specialist teams helped over 28,000 customers experiencing financial hardship and we were the first bank in Australia to offer the option of negotiating hardship payment arrangements through online banking. To assist customers impacted by the mining downturn in Western Australia, we have set up a dedicated team of case management specialists. Supporting Businesses of Tomorrow This year we announced our 200 Businesses of Tomorrow, recognising businesses that are contributing to Australia’s future as it transitions to a knowledge economy. 20 high-potential businesses also received a $100,000 professional services package and study tour to the USA and China. Increased lending to social and affordable housing This year we increased our lending and investment in the social and affordable housing sector to $1.32 billion, up from $1.05 billion a year ago, although this is short of our $2 billion target. There are changes underway, 2017 target Up to 2.0 2017 1.32 2016 1.05 2014 225,260 2017 target 300,000 2017 354,981 2016 296,931 Better financial futures Actions to help customers have a better relationship with money, for a better life 2017 INITIATIVES Financial inclusion however the pace of policy Improving financial This year we released our change has been slower literacy Action Plan laying out our scaleable solutions remains training to 112,263 people for the next 12 months key area of focus in the workshops and online around the areas of crisis next phase of our sessions. and hardship, understanding sustainability strategy. money and inclusive growth. Improving banking Better banking for

 


28 WESTPAC GROUP FIVE–YEAR SUMMARY FINANCIAL AND OTHER INFORMATION1 (in $millions unless otherwise indicated) 1. The Summary Income Statement and the Balance Sheet information and key financial ratios (excluding cash ratios) have been extracted from the 2017 Westpac Group audited Annual Report. For more detail please refer to the 2017 Westpac Group Annual Report, available at www.westpac.com.au/investorcentre. 2. Cash earnings is viewed as a measure of the level of profit that is generated by ongoing operations and is therefore considered in assessing distributions, including dividends. For more detail refer to the 2017 Westpac Group Annual Report. 3. Excludes special dividends. 4. Total equity attributable to owners of Westpac, after deducting intangible assets divided by the number of ordinary shares outstanding, less treasury shares held. Comparatives have been restated for changes in accounting policies. For more detail refer to the 2017 Westpac Group Annual Report. 2017 2016 2015 2014 2013 Income statements for the years ended 30 September Net interest income 15,516 15,14814,267 13,542 12,821 Non-interest income 6,286 5,837 7,375 6,395 5,774 Net operating income before operating expenses and impairment charges 21,802 20,985 21,642 19,937 18,595 Operating expenses (9,434) (9,217) (9,473) (8,547) (7,976) Impairment charges (853) (1,124)(753)(650) (847) Profit before income tax 11,515 10,644 11,416 10,740 9,772 Income tax expense (3,518) (3,184) (3,348)(3,115)(2,947) Profit attributable to non-controlling interests (7) (15) (56)(64) (74) Net profit attributable to owners of Westpac Banking Corporation 7,990 7,445 8,0127,5616,751 Cash earnings adjustments 72 377 (192) 67 312 Cash earnings2 8,062 7,822 7,820 7,628 7,063 Financial position and key financial ratios Balance sheet as at 30 September Total assets 851,875 839,202 812,156770,842 701,097 Total shareholders’ equity and non-controlling interests 61,342 58,181 53,915 49,337 47,537 Business performance Operating expenses to operating income ratio (%) 43.3 43.9 43.8 42.9 42.9 Net interest margin (%) 2.06 2.102.09 2.09 2.14 Capital adequacy Common equity tier 1 capital ratio – APRA Basel III (%) 10.6 9.5 9.5 9.0 9.1 Tier 1 capital ratio (%) 12.7 11.211.4 10.6 10.7 Total capital ratio (%) 14.8 13.113.312.312.3 Total equity to total assets (%) 7.2 6.9 6.6 6.4 6.8 Credit quality Net impaired assets to equity and collectively assessed provisions (%) 1.3 1.81.82.5 4.1 Total impairment provisions to total loans (basis points) 45 54 53 60 73 Shareholder value Dividends per ordinary share (cents) 188 188187182174 Special dividends per ordinary share (cents) – –––20 Dividend payout ratio (%)3 79.3 84.2 73.4 74.7 79.7 Dividend payout ratio – cash earnings (%)3 78.7 80.3 75.4 74.2 76.5 Cash earnings on average ordinary equity (%) 13.8 14.015.816.415.9 Cash earnings per share (cents) 239.7 235.5 248.2 245.4 227.8 Net tangible assets per ordinary share4 ($) 14.66 13.90 13.0211.5111.02 Share price as at 30 September ($) 31.92 29.5129.70 32.1432.73

 


 

2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 29 FIVE-YEAR NON-FINANCIAL SUMMARY1,2 1. Definitions and further information on metrics is available in the 2017 Westpac Group Annual Report and online at www.westpac.com.au/investorcentre. 2. Expanded set of performance metrics for Employees, Customers, Sustainable lending and investment, Environment, Suppliers and Social and economic impact are available in the 2017 Westpac Group Sustainability Performance Report and online at 2017annualreport.westpacgroup.com.au. 2017 2016 2015 2014 2013 Customer Total customers (millions) 13.8 13.413.112.812.2 Digitally active customers (millions) 5.3 4.9 4.9 4.7 4.2 Branches 1,251 1,3101,4291,5341,544 Branches with 24/7 capability (%) 29 27 22 15– ATMs 3,665 3,757 3,850 3,890 3,814 Smart ATMs (%) 44 37 3124 17 Change in consumer compliments (%) – Australia 19 38 ––– Change in consumer complaints (%) – Australia (18) (31) (31) (27) (15) Change in consumer complaints (%) – NZ (21) (7) (18) (16) 19 Wealth customer penetration (%) 17.6 19.119.720.0 18.7 Employees Total employees (full-time equivalent) 35,096 35,580 35,484 36,596 35,894 Employee voluntary attrition (%) 9.6 10.6 10.6 9.8 9.8 New starter retention (%) 84.7 85.5 85.3 88.0 86.7 Employee engagement index (%) 79 69 ––– Lost Time Injury Frequency Rate (LTIFR) 0.6 0.8 0.8 1.1 1.5 Women as percentage of the total workforce (%) 58 58 59 59 60 Women in leadership (%) 50 48 46 44 42 Environment Total Scope 1 and 2 emissions – Aust and NZ (tonnes CO2-e) 131,723 154,339 173,437 175,855 180,862 Total Scope 3 emissions – Aust and NZ (tonnes CO2-e) 68,415 63,01667,899 73,87185,013 Paper consumption – Aust and NZ (tonnes) 2,706 3,3044,857 5,334 5,762 Sustainable lending and investment CleanTech and environmental services attributable financing – Aust and NZ ($millions) 6,979 6,1936,054 7,978 6,438 Proportion of electricity generation financing in renewables including hydro – Aust and NZ (%) 65 59 6159 55 Electricity generation portfolio emissions intensity (tonnes CO2-e/MWh) 0.36 0.38 0.38 0.41 0.44 Finance assessed under the Equator Principles – Group ($millions) 891 6171,065851268 Responsible investment funds under management ($millions) 21,881 18,72315,017–– Social Impact Community investment ($millions) 164 148149217131 Community investment as a percentage of pre-tax profits – Group (%) 1.42 1.391.302.02 1.33 Community investment as a percentage of pre-tax operating profit (cash earnings basis) 1.41 1.321.331.991.28 Financial education (participants) 112,263 59,596 65,538 49,812 32,577 Supply chain Number of suppliers assessed against Responsible Sourcing Code of Conduct 31 –––– Spend with indigenous Australian suppliers – Australia ($millions) 2.5 1.61.2––

 


30 WESTPAC GROUP EXECUTIVE TEAM Brian Hartzer Managing Director & Chief Executive Officer Lyn Cobley Chief Executive, Westpac Institutional Bank Brad Cooper Chief Executive Officer, BT Financial Group Dave Curran Chief Information Officer George Frazis Chief Executive, Consumer Bank Alexandra Holcomb Chief Risk Officer Peter King Chief Financial Officer Rebecca Lim Group Executive, Compliance, Legal & Secretariat1 David Lindberg Chief Executive, Business Bank David McLean Chief Executive Officer, Westpac New Zealand Limited Christine Parker Group Executive, Human Resources, Corporate Affairs & Sustainability Gary Thursby Chief Executive, Strategy & Enterprise Services 1. Rebecca Lim’s title was changed from Group General Counsel & Chief Compliance Officer to Group Executive, Compliance, Legal & Secretariat effective from 2 October 2017.

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 31 BOARD OF DIRECTORS Lindsay Maxsted DipBus (Gordon), FCA, FAICD Independent Director since March 2008. Chairman since December 2011. Chairman of the Board Nominations Committee. Member of each of the Board Audit and Board Risk & Compliance Committees. Brian Hartzer BA, CFA Nerida Caesar BCom, MBA, GAICD Ewen Crouch AM BEc (Hons.), LLB, FAICD Alison Deans BA, MBA, GAICD Managing Director & Chief Executive Officer since February 2015. Member of the Board Technology Committee. Independent Director since September 2017. Member of each of the Board Risk & Compliance and Board Technology Committees. Independent Director since February 2013. Chairman of the Board Risk & Compliance Committee. Member of each of the Board Nominations and Board Remuneration Committees. Independent Director since April 2014. Member of each of the Board Risk & Compliance and Board Technology Committees. Craig Dunn BCom, FCA Robert Elstone BA (Hons.), MA (Econ.), MCom Peter Hawkins BCA (Hons.), SF Fin, FAIM, ACA (NZ), FAICD Peter Marriott BEc (Hons.), FCA Independent Director since June 2015. Chairman of the Board Remuneration Committee. Member of each of the Board Risk & Compliance and Board Nominations Committees. Independent Director since February 2012. Member of each of the Board Audit, Board Remuneration and Board Risk & Compliance Committees. Independent Director since June 2013. Chairman of the Board Audit Committee. Member of each of the Board Nominations, Board Risk & Compliance and Board Technology Committees. Independent Director since December 2008. Chairman of the Board Technology Committee. Member of each of the Board Audit, Board Nominations and Board Risk & Compliance Committees.

 


32 WESTPAC GROUP REMUNERATION CEO and Senior Executive Remuneration Westpac’s remuneration strategy is designed to attract and retain talented employees, by rewarding them for achieving high performance and delivering superior long term results for our customers and shareholders, while adhering to sound management and governance principles and reflecting accountability. SENIOR EXECUTIVE TEAM: REMUNERATION REALISED DURING 2017 ($) (either as cash or in the case of equity, the value that has vested during 2017) Fixed remun-eration1 2017 Cash STI awarded and paid2 Prior year Deferred STI vested in 20173 Prior year LTI vested Total remuneration Prior year LTI forfeited in 20174 Name Position in 20174 realised in 20175 Brian Hartzer Managing Director & Chief Executive Officer 2,686,000 1,490,730 1,280,114 – 5,456,844 3,046,592 Lyn Cobley Chief Executive, Westpac Institutional Bank 1,122,000 640,000 244,864 – 2,006,864 – Philip Coffey6 Deputy Chief Executive Officer 908,741 457,500 669,828 – 2,036,069 2,237,655 Brad Cooper Chief Executive Officer, BT Financial Group 1,102,517 792,500 779,625 – 2,674,642 2,206,129 Dave Curran Chief Information Officer 952,000 552,500 510,291 – 2,014,791 – George Frazis Chief Executive, Consumer Bank 1,150,000 872,500 876,225 – 2,898,725 1,155,565 Alexandra Holcomb Chief Risk Officer 1,003,000 532,500 498,536 – 2,034,036 772,487 Peter King Chief Financial Officer 1,088,000 615,000 536,202 – 2,239,202 1,132,480 Rebecca Lim Group General Counsel & Chief Compliance Officer 750,000 412,500 248,227 – 1,410,727 388,674 David Lindberg Chief Executive, Business Bank 952,000 532,500 419,808 – 1,904,308 709,083 David McLean Chief Executive Officer, Westpac New Zealand Limited 864,889 412,570 430,410 – 1,707,869 – Christine Parker Group Executive, Human Resources, Corporate Affairs & Sustainability 850,000 517,500 481,816 – 1,849,316 1,365,665 Gary Thursby Group Executive, Strategy & Enterprise Services 840,000 485,000 371,764 – 1,696,764 409,680 1. Fixed remuneration includes base salary plus employer superannuation contributions. 2. Cash STI awarded and paid represents 50% of the 2017 STI outcome and will be paid in December 2017. The remaining 50% is deferred in the form of equity granted in December 2017 which will vest in equal tranches in October 2018 and 2019. 3. Prior year Deferred STI vested in 2017 represents 25% of 2015 and 2016 STI outcomes awarded as deferred equity vested in 2017. 4. Prior year LTI vested and forfeited in 2017 represent the equity awarded under the 2014 LTI vested and forfeited in 2017. 5. This is the addition of the four prior columns. 6. Philip Coffey ceased role on 31 May 2017. Non-executive Director Remuneration Westpac’s Non-executive Director remuneration strategy is designed to attract and retain experienced, qualified Board members and remunerate them appropriately for their time and expertise. With a Board focus on strategic direction, long-term corporate performance and the creation of shareholder value, fees for Non-executive Directors are not directly related to the Group’s short-term results and they do not receive performance-based remuneration. BOARD OF DIRECTORS: REMUNERATION RECEIVED DURING 2017 ($) Westpac Banking Corporation Board fee1 Subsidiary and Advisory Board fees Name Position Superannuation Total Lindsay Maxsted Chairman 810,000 – 19,734 829,734 Elizabeth Bryan2 Director 62,214 – 3,709 65,923 Nerida Caesar3 Director 18,921 – 1,619 20,540 Ewen Crouch Director 323,719 – 19,734 343,453 Alison Deans Director 277,000 – 19,734 296,734 Craig Dunn Director 314,221 – 19,734 333,955 Robert Elstone Director 318,000 – 19,734 337,734 Peter Hawkins Director 324,200 35,000 19,658 378,858 Peter Marriott Director 347,400 – 19,734 367,134 1. Includes fees paid to the Chairman and members of Board Committees. 2. Elizabeth Bryan retired on 9 December 2016. 3. Nerida Caesar was appointed on 1 September 2017.

 


2017 ANNUAL REVIEW & SUSTAINABILITY REPORT 33 Financial calendar for Westpac Ordinary Shares Contact details Head Office 275 Kent Street Sydney NSW 2000 Australia Tel: +61 2 9155 7713 Fax: +61 2 8253 4128 From outside Australia: +61 2 9155 7700 Record date for final dividend 14 November 2017 Annual General Meeting 8 December 2017 Final dividend payable 22 December 2017 Financial Half Year end 31 March 2018 Interim results and dividend announcement 7 May 2018 Record date for interim dividend 18 May 2018 Interim dividend payable 4 July 2018 Financial Year end 30 September 2018 Share Registrar Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000 Australia Mail: Locked Bag A6015 Sydney South NSW 1235 Tel: +61 1800 804 255 Fax: +61 2 9287 0303 Email: westpac@linkmarketservices.com.au www.linkmarketservices.com.au Annual General Meeting The Westpac Annual General Meeting (AGM) will be held on Friday, 8 December 2017 at the International Convention Centre Sydney commencing at 10:00am (Sydney time). The AGM will be webcast live on the Westpac website at www.westpac.com.au/investorcentre for shareholders unable to attend. Additional reporting information Westpac provides a suite of information about the Group’s Full Year 2017 performance, including the Annual Report, Full Year Financial Results, Investor Discussion Pack, Sustainability Performance Report and other Shareholder information including a financial calendar. These materials can be found on the Westpac Group Investor Centre website at www.westpac.com.au/investorcentre. Supplementary information about the Group’s Full Year 2017 performance, including details about our approach to our strategic priorities and sustainability objectives, case studies and material issues assessment, can be found online at www.2017annualreport.westpacgroup.com.au. Westpac Investor Relations Email: investorrelations@westpac.com.au Tel: +61 2 8253 3143 www.westpac.com.au/investorcentre Westpac Group Sustainability Email: sustainability@westpac.com.au Tel: 1300 130 964 From outside Australia: +61 2 9767 0064 For further information on Westpac Group’s sustainability approach, policies and performance, please visit www.westpac.com.au/sustainability. Westpac Group’s 2017 Reporting Suite Supporting 200 Years Annual Report The Westpac Group 2017 Annual Review & Sustainability Report is printed on PEFC certified paper. Compliance with the certification criteria set out by the Programme for the Endorsement of Forest Certification (PEFC) means that the paper fibre is sourced from sustainable forests. Assurance Our adherence to the GRI G4 Sustainability Reporting Guidelines and disclosures associated with alignment to the AA1000 AccountAbility Principles Standard have been independently assured by PwC. For further information please refer to the detailed assurance statement available in the 2017 Sustainability Performance Report at www.2017annualreport.westpacgroup.com.au. For information on our compliance with International Agreements, including the United Nations Global Compact and Declaration on Human Rights, contact the General Manager of Group Corporate Affairs & Sustainability via Westpac Group Sustainability, details above. Proudly Supporting Australia for 200 Years 2017 Westpac Group Annual Review & Sustainability Report Proudly Australia for 2017 Westpac Group Australia for 2017 Westpac Group Sustainability Performance Report Proudly Supporting 200 Years

 


2X> I Ulestpac GROUP www.westpac.com.au

 

a17-25178_2ex2.htm EX-2


Exhibit 2

Notice of Meeting Westpac Banking Corporation 2017 Annual General Meeting Friday, 8 December 2017 10:00am (Sydney time) The Darling Harbour Theatre, Level 2 International Convention Centre Sydney 14 Darling Drive, Sydney NSW 2000 Westpac Banking Corporation ABN 33 007 457 141


Westpac 2017 Annual General Meeting Dear Shareholder It is my pleasure to invite you to Westpac’s 2017 Annual General Meeting (AGM). The meeting will be held in The Darling Harbour Theatre, on Level 2, at the International Convention Centre Sydney on Friday, 8 December 2017, at 10:00am. Registration commences from 9:00am. The AGM is an opportunity for shareholders to hear from the Board and the Executive team, to ask questions about the company and to vote on matters before the meeting. I hope you will be able to attend. Our Managing Director and Chief Executive Officer, Brian Hartzer, and I will both speak to update shareholders on performance and important developments over the year. If you are unable to attend the AGM, you can view the meeting via our live webcast from our website www.westpac.com.au/investorcentre. Alternatively you may view the recorded webcast after the meeting at a time that suits you. If you cannot attend and wish to vote you will need to lodge a direct vote or appoint a Proxy. The easiest way to cast a direct vote or appoint a Proxy is online via our Share Registry’s dedicated website vote.linkmarketservices.com/WBC or by scanning the QR code on the back of the Voting Form and following the prompts. Other methods of voting are described in detail in this Notice of Meeting. The Board is always keen to hear from shareholders and so, if you cannot attend, you can submit a question relevant to the AGM prior to the meeting through the voting site above or by returning the question form included with this Notice of Meeting. We will not be able to respond to all questions submitted, but I will consider these questions in preparing my AGM address.

 


The 2017 AGM agenda will be similar to recent years. There are items for the accounts, the remuneration report, the granting of equity to the Chief Executive Officer and the re-election of three directors, including myself. This year we are also asking shareholders to vote on the appointment of a new director, Nerida Caesar. Finally, we have resolutions on the terms and conditions to facilitate the buy-backs of Westpac Convertible Preference Shares. As in prior years, we aim to make the event as accessible as possible, with arrangements for the mobility impaired, a sign language interpreter and hearing loop facilities. Details of how to get to the AGM are set out at the back of this document. If you have elected to receive a hard copy of our Annual Report and/or our Annual Review and Sustainability Report, you will receive these in a separate envelope shortly. These reports will also be available on our website once they have been lodged with the ASX. As always, your Board and the Executive team look forward to meeting with you over light refreshments at the conclusion of the AGM. I look forward to welcoming you to the AGM. Yours sincerely, Lindsay Maxsted Chairman 8 November 2017 3

 


Westpac 2017 Annual General Meeting Notice of Annual General Meeting The Annual General Meeting (AGM) of Westpac Banking Corporation (ABN 33 007 457 141) (Westpac) will be held in The Darling Harbour Theatre, on Level 2, at the International Convention Centre Sydney, 14 Darling Drive, Sydney New South Wales 2000, on Friday, 8 December 2017, commencing at 10:00am (Sydney time). Items of Business 1. Financial Reports To receive and consider the Financial Report, the Directors’ Report and the Auditor’s Report for the year ended 30 September 2017. 2. Remuneration Report To adopt the Remuneration Report for the year ended 30 September 2017. 3. Grant of equity to Managing Director and Chief Executive Officer To approve the grant of shares and performance share rights to the Managing Director and Chief Executive Officer (CEO), Brian Hartzer, under the CEO Restricted Share Plan and Long Term Incentive Plan (Plans) in accordance with the rules of those Plans and on the terms summarised in the Explanatory Notes in this Notice of Meeting, for all purposes, including ASX Listing Rule 10.14 and sections 200B and 200E of the Corporations Act 2001 (Cth). 4

 


4. Buy-back of Westpac Convertible Preference Shares To approve the terms and conditions of the buy-back schemes of Westpac Convertible Preference Shares (CPS) as special resolutions. The buy-back schemes are described in the Explanatory Notes in this Notice of Meeting and comprise: (a) First Buy-back Scheme – This relates to the buy-back of CPS at any time prior to the first Optional Conversion/Redemption Date of 31 March 2018. Up to 100% of the CPS that remain on issue may be bought back; and (b) Second Buy-back Scheme – This relates to the buy-back of CPS on an Optional Conversion/ Redemption Date (being any Dividend Payment Date for the CPS falling on or after 31 March 2018) within 12 months from the date of the AGM. Up to 100% of the CPS that remain on issue may be bought back. 5. Re-election and election of Directors (a) To re-elect Lindsay Maxsted as a Director. (b) To re-elect Peter Hawkins as a Director. (c) To re-elect Catriona Alison Deans (Alison Deans) as a Director. (d) To elect Nerida Caesar as a Director. By order of the Board of Directors Timothy Hartin Group Company Secretary 8 November 2017 5

 


Westpac 2017 Annual General Meeting Voting exclusions Items 2 and 3 – Remuneration Report and grant of equity to Managing Director and Chief Executive Officer Items 2 and 3 are resolutions directly or indirectly related to remuneration of a member of the Key Management Personnel (KMP) of Westpac. Westpac’s KMP are set out in Westpac’s Remuneration Report. The Corporations Act 2001 (Cth) (Corporations Act) restricts KMP and their closely related parties from voting in certain circumstances on such resolutions. A ’closely related party’ of a KMP includes a spouse, dependants and certain other close family members, as well as any companies controlled by the KMP. In accordance with these requirements, Westpac will disregard any votes cast on Item 2, in any capacity, by or on behalf of a member of the KMP or that KMP’s closely related parties. Westpac will also disregard any votes cast on Items 2 and 3 as Proxy by any member of the KMP at the date of the AGM or that KMP’s closely related parties, unless the vote is cast: • by a Proxy for a person entitled to vote, in accordance with the directions on the Voting Form; or • by the Chairman of the AGM as Proxy for a person entitled to vote, in accordance with an express authority on the Voting Form to vote undirected proxies as the Chairman sees fit. In addition, Westpac will disregard any votes cast on Item 3 by Mr Hartzer and any associate of Mr Hartzer in accordance with the ASX Listing Rules. However, Westpac will not disregard a vote cast by Mr Hartzer as Proxy for a person who is entitled to vote, in accordance with the directions on the Voting Form. Mr Hartzer is the only Director currently eligible to participate in an employee incentive scheme. 6

 


Items 4(a) and 4(b) – Buy-back of Westpac Convertible Preference Shares Under the Corporations Act Westpac is required to disregard any votes cast in favour of Items 4(a) and 4(b) by a person whose CPS may be bought back (or by their associates or proxies). This voting restriction applies not only to that person’s CPS but to their other shareholdings in Westpac (including ordinary shares). However, Westpac has obtained an exemption from the Australian Securities and Investments Commission so a CPS holder who also holds ordinary shares as a nominee or custodian (Nominee Holder) for another person (Beneficial Holder) can vote those ordinary shares in favour of Items 4(a) and 4(b), provided that: • the Nominee Holder either: – appoints a Proxy prior to the AGM; or – lodges a direct vote on the Voting Form prior to the AGM; and • before the date of the AGM, the Nominee Holder provides Westpac with written confirmation to the effect that: – the Nominee Holder has received written confirmation from the Beneficial Holder to the effect that the Beneficial Holder does not hold any CPS and is not an associate of a person who holds CPS; and – the Beneficial Holder has given a direction to the Nominee Holder to vote in favour of the resolution. Otherwise, no holder of CPS or their associates are entitled to vote in favour of Items 4(a) and 4(b) and no holder of CPS may vote on Item 4(b). However, Westpac will not disregard a vote if it is cast: • by a Proxy for a person entitled to vote, in accordance with the directions on the Voting Form; or • by the Chairman of the AGM as Proxy for a person entitled to vote, in accordance with the directions on the Voting Form. 7

 


Westpac 2017 Annual General Meeting Conduct of the Westpac AGM All Westpac shareholders (a term referring to both holders of ordinary shares and holders of CPS) may attend the AGM and ask a question. For the purposes of the AGM, shares will be taken to be held by the persons registered as the holders of those shares at 7:00pm (Sydney time) on Wednesday, 6 December 2017. but a vote may not be (In relation to Item be cast in favour of * Refer to Voting Exclusion section. The AGM is an important forum for interaction between the Board and Executive team and shareholders. Our AGM is intended to give shareholders the opportunity to: • hear from the Chairman and the CEO about the performance and operations of Westpac; • consider and vote on the resolutions before the AGM (subject to voting restrictions); and 8 Investor Right to attend and speak Right to vote Holders of only ordinary shares * Holders of only CPS * (Only on Item 4(a) cast in favour of this resolution) Holders of ordinary shares and CPS * 4(a), a vote may not this resolution)

 


• ask questions of the Board and the Auditor. The Chairman and the CEO will generally answer questions from shareholders however, some questions may be referred to the Auditor, or to a senior executive, or if appropriate, a response will be provided as soon as possible after the AGM. To do this, we will: • provide shareholders a reasonable opportunity to ask questions; inform shareholders of the proxy position on each resolution and the manner in which the Chairman of the AGM will vote available proxies; provide sign language and hearing loop facilities; provide assistance for people with mobility or vision impairment; and webcast the AGM live on our website at www.westpac.com.au/investorcentre and enable shareholders to ask questions before the AGM. • • • • To assist us to achieve all this, we ask that shareholders: • • follow the instructions of those running the AGM; are courteous and respectful to all attending, and assisting in running, the AGM; keep questions to a reasonable length, and do not repeat questions already asked (and answered), to allow as many shareholders as possible to participate; confine questions to matters being considered at the AGM and which are relevant to shareholders as a whole. Questions relating to individual circumstances can be raised with Westpac or Link Market Services (Link) representatives who will be available before and after the AGM. Personal banking matters will be directed to a senior executive who will be available to assist shareholders; and do not photograph, videotape or record the AGM. • • • 9

 


Westpac 2017 Annual General Meeting How to vote Submitting a direct vote This year shareholders can vote directly on Items as an alternative to voting at the AGM in person or by Proxy. A direct vote can be lodged online or by completing the direct voting section of the Voting Form and returning it in accordance with the instructions below. For your vote to be counted, you must complete the voting directions for each Item by marking ‘For’, ‘Against’ or ‘Abstain’. If you vote on at least one Item but leave other Items blank, the vote on the Items marked will be valid but no vote will be counted for the Items left blank. If you leave the Voting Form blank for all Items, the Chairman of the AGM will be deemed to be your appointed Proxy for all Items. By submitting a direct vote, you agree to be bound by the direct voting rules adopted by the Board. The direct voting rules are available on the Westpac website at www.westpac.com.au/investorcentre. Further instructions on direct voting are available on the reverse of the Voting Form. Appointing a Proxy Shareholders are entitled to appoint up to two Proxies to attend the AGM on their behalf, and vote in accordance with their instructions on the Voting Form. A Proxy need not be a shareholder of Westpac. Where two Proxies are appointed, each Proxy can be appointed to represent a specified proportion or number of a shareholder’s votes. If no number or proportion of votes is specified, each Proxy may exercise half of the shareholder’s votes. 10

 


 

If a Proxy is instructed to abstain from voting on a resolution, they must not vote on the shareholder’s behalf, and any vote cast will not be counted. If you appoint a Proxy (other than the Chairman of the AGM) and direct them how to vote, the Chairman of the AGM must cast those Proxy votes on your behalf if your Proxy does not do so. If you appoint the Chairman of the AGM as your Proxy (or if he is appointed by default), and no direction is provided in relation to Item 2 or Item 3, you will be expressly authorising the Chairman to exercise your Proxy as the Chairman sees fit in relation to those Items, even though those Items are connected directly or indirectly with the remuneration of a member of Westpac’s KMP. If you wish to appoint the Chairman of the AGM as Proxy with a direction as to how to vote on an Item, including Item 2 and Item 3, you should specify this by completing the ‘For’, ‘Against’ or ‘Abstain’ boxes on the Voting Form. The Chairman of the AGM intends to vote all available Proxies in favour of all resolutions. If you appoint a Director (other than the Chairman) or another member of Westpac’s KMP or their closely related parties as your Proxy, you must specify how they should vote on Item 2 and Item 3 by completing the ‘For’, ‘Against’ or ‘Abstain’ boxes on the Voting Form. If you do not, your Proxy will not be able to exercise your vote for that Item. Shareholders are encouraged to direct their Proxies on how to vote. If a Proxy is not directed how to vote, the Proxy may vote, or abstain, as they see fit except as described above for Item 2 and Item 3. Should any new Items be proposed at the AGM, a Proxy may vote on those Items as they see fit. Further instructions on appointing Proxies are available on the reverse of the Voting Form or online at vote.linkmarketservices.com/WBC. 11


Westpac 2017 Annual General Meeting Submitting a Voting Form Voting Forms can be submitted in the following ways: Online – at vote.linkmarketservices.com/WBC. Follow the prompts and have your Shareholder Reference Number (SRN) or Holder Identification Number (HIN) available. QR Code – using a mobile device you can scan the QR code on the back on the Voting Form. To scan the QR code you will need a QR code reader app that can be downloaded for free on your mobile device. You will also need your SRN or HIN and the postcode for your shareholding. Email – you can scan and email a completed Voting Form (together with any authority under which a Voting Form is signed, or a certified copy of that authority) to vote@linkmarketservices.com.au. By post, hand or facsimile – completed Voting Forms (together with any authority under which a Voting Form is signed, or a certified copy of that authority) may be posted to Link Market Services Limited, Locked Bag A6015, Sydney South, NSW 1235, using the enclosed return envelope; or hand delivered to Link Market Services Limited at 1A Homebush Bay Drive, Rhodes, NSW 2138; or sent by facsimile to (+61 2) 9287 0309. All Voting Forms must be received (either online or by post) by 10:00am (Sydney time) on Wednesday, 6 December 2017. Corporate representatives A corporation which is a shareholder, or which has been appointed a Proxy, may appoint an individual to act as a representative to vote at the AGM. The appointment must comply with section 250D of the Corporations Act. The representative should bring to the AGM evidence of his or her appointment unless it has previously been provided to Link. Voting by poll Voting on resolutions at the AGM will be conducted by poll. Further details on the poll will be provided at the AGM. 12

 


Explanatory notes Item 1: Financial Reports This Item relates to Westpac’s Financial Report, Directors’ Report and Auditor’s Report (the Reports) for the year ended 30 September 2017. This Item does not require a formal resolution and so no vote will be held. However shareholders will be given an opportunity to ask questions on the Reports. The Reports are in Westpac’s 2017 Annual Report and can be accessed on our website at www.westpac.com.au/investorcentre. Item 2: Remuneration Report Shareholders are asked to adopt Westpac’s Remuneration Report for the year ended 30 September 2017. This report is included in the Directors’ Report in Westpac’s 2017 Annual Report and is available at www.westpac.com.au/investorcentre. The Remuneration Report outlines Westpac’s remuneration strategy and objectives and provides details of Board and KMP remuneration received during the year. Westpac’s remuneration strategy is designed to attract and retain talented employees, by rewarding them for achieving high performance and delivering superior long-term results for customers and shareholders, while adhering to sound risk management and governance principles and refiecting accountability. The remuneration strategy also seeks to align the interests of KMP with shareholders. Westpac’s remuneration strategy for Non-executive Directors is to remunerate them appropriately for their time, expertise and insight into strategic and governance issues, and to ensure Westpac is able to attract and retain high quality and experienced Directors. 13

 


Westpac 2017 Annual General Meeting Westpac values shareholder feedback and the Board will take the outcome of the vote into account when considering future remuneration policies, however the vote on this resolution is advisory only and will not bind the Board or Westpac. A voting exclusion applies to this resolution, as set out earlier in this Notice of Meeting. The Board unanimously recommends shareholders vote in favour of adopting the Remuneration Report. The Chairman of the AGM intends to vote all available proxies in favour of this resolution. Item 3: Grant of Equity to Managing Director and Chief Executive Officer Shareholders are asked to vote on whether the CEO, Brian Hartzer, should receive equity securities as part of his 2018 financial year remuneration, rather than cash. The Board believes the CEO’s interests should be closely aligned to the long-term interests of shareholders. Accordingly, the Board believes the CEO should maintain a substantial shareholding in Westpac and receive part of his remuneration in the form of equity that only vests if certain conditions or hurdles are achieved. It is proposed that equity grants to Mr Hartzer be made up of two elements: 1. Under the CEO Restricted Share Plan (CEO RSP), half of Mr Hartzer’s short-term incentive would be paid as deferred shares that only vest if he remains with Westpac or in other limited circumstances discussed below. These deferred shares would vest in two tranches over two years. 2. Under the CEO Long Term Incentive Plan (CEO LTIP), long-term incentives would be allocated in the form of performance share rights which only vest if certain hurdles are met. 14

 


An overview of these plans is provided below. 1. Overview of the CEO RSP and CEO LTIP The CEO RSP and CEO LTIP were established to provide deferred short-term incentive (STI) and long-term incentive (LTI) awards to our CEO. The terms of the CEO RSP and CEO LTIP were determined by the Board in accordance with Mr Hartzer’s employment agreement and, consistent with our remuneration strategy, have been designed to link Mr Hartzer’s remuneration to sustained long-term value for shareholders. The plans are considered appropriate as they: • place a high proportion of Mr Hartzer’s remuneration at risk because, to receive value, certain performance goals and hurdles must be achieved. These goals and hurdles are aligned to achieving superior shareholder value; • align Mr Hartzer’s remuneration outcomes with the interests of shareholders; and • ensure Mr Hartzer’s remuneration is competitive and aligned with market remuneration in the financial services industry. Each year, the Board determines Mr Hartzer’s STI target amount. The STI amount Mr Hartzer is actually awarded is then determined by the Board at the end of each financial year based on his performance against a balanced scorecard of financial and non-financial objectives. The STI amount awarded will range between 0% and 150% of the STI target amount. The Board currently requires that 50% of any STI award granted be deferred under the CEO RSP. This approach would see Mr Hartzer receive restricted shares that subsequently vest in two equal tranches over the following two years. The Board retains the discretion to determine the portion of any STI award that is deferred and the period of any such deferral. Each year, under the CEO LTIP, Westpac may grant performance share rights to Mr Hartzer. If certain performance hurdles are met, and these 15

 


Westpac 2017 Annual General Meeting rights vest, Mr Hartzer is entitled to one Westpac ordinary share for each vested performance share right. The CEO LTIP award only delivers value to Mr Hartzer if certain performance hurdles are satisfied. These hurdles are based on a peer-weighted Total Shareholder Return (TSR) index and Westpac’s average cash Return on Equity (ROE). 2. Why is shareholder approval being sought? Under the CEO RSP and LTIP, the Board decides whether any shares awarded will be acquired on-market or issued by Westpac. In order to retain fiexibility to issue shares under either the CEO RSP or the CEO LTIP, shareholder approval is being sought under ASX Listing Rule 10.14 which requires shareholder approval if a director is issued securities under an employee incentive scheme. If shareholder approval is not obtained, Mr Hartzer’s deferred STI and LTI will be delivered in cash. Shareholder approval is also being sought for the purposes of section 200B and section 200E of the Corporations Act for any termination benefits that might be given to Mr Hartzer in connection with the deferred STI and LTI awards covered by Item 3. If approved, Mr Hartzer will be entitled to receive any benefit arising through these awards upon termination (subject to various conditions), in addition to any other termination benefits that may be provided to him, without further shareholder approval. It is intended that this approval will remain valid during the life of any securities granted in relation to Item 3. Further details of Mr Hartzer’s remuneration package and performance hurdles for Westpac’s 2017 financial year are set out in the Remuneration Report in Westpac’s 2017 Annual Report, which is available at www.westpac.com.au/investorcentre. CEO RSP – 2018 STI award Mr Hartzer’s 2018 STI target is $2,686,000. Once Mr Hartzer’s 2018 STI award has been determined by the Board (which will be assessed at the end of the 2018 financial year), 50% will be delivered 3. 16

 


in cash and 50% as restricted shares under the CEO RSP. Half of Mr Hartzer’s deferred STI will be restricted for one year from the commencement of the restriction period (1 October 2018) and the remainder will be restricted for two years. If new shares are issued by Westpac to satisfy this obligation, the number of restricted shares Mr Hartzer receives will be determined by dividing the dollar value of his deferred STI by the market price (being the volume weighted average market price of Westpac’s ordinary shares, as traded on the ASX in the five trading days up to and including the day before the award is made). If Westpac acquires shares on-market to satisfy this obligation, the market price is the average purchase price of the shares. Example: Assuming Mr Hartzer is awarded 100% of his 2018 STI target for his 2018 financial year performance, he would be entitled to $2,686,000. Half of that (i.e. $1,343,000) would be paid in cash and the other half would be delivered as restricted shares. Assuming a market price of $33.00 per share, 40,696 restricted shares would be granted to Mr Hartzer in December 2018. Subject to meeting the conditions of the restricted shares, half of the restricted shares would be released to Mr Hartzer on 1 October 2019, while the other half would be released on 1 October 2020. This is an indicative example only as actual STI will depend on the CEO’s award and the market price of Westpac shares at the time of the grant. 4. CEO LTIP – 2018 LTI award The Board has determined that Mr Hartzer will receive a 2018 LTI award comprising a grant of 197,654 performance share rights under the CEO LTIP, to the value of $2,528,000. The number of performance share rights to be granted to Mr Hartzer was determined by dividing the dollar value of the award by the notional value of the performance share rights at the start of the performance period (being 1 October 2017). 17

 


Westpac 2017 Annual General Meeting For TSR hurdled performance share rights, the notional value was $12.79 and for ROE hurdled performance share rights, the notional value was $12.79. Example: For illustrative purposes, the face value of the 2018 CEO LTIP performance share rights was $6,599,667 (based on the one week volume weighted average price of Westpac’s shares traded on the ASX in the week up to 26 October 2017). The face value in this instance assumes that Westpac achieved the maximum result for its performance hurdles and so 100% of the share rights vested. In 2017, the application of the performance hurdles resulted in 0% of the LTI award vesting. The notional values of the TSR and ROE performance share rights were calculated by an independent valuer, taking the market price of Westpac shares at the start of the performance period, and using a Monte Carlo pricing model. This methodology is applied consistently across all Westpac executives who receive performance share rights. If no securities vest, the value of the grant will be $0. Under the CEO LTIP, Board-determined performance hurdles must be satisfied before any securities can vest (except in limited circumstances such as death or total and permanent disablement, as explained below). For the 2018 grant, the performance hurdles are TSR and ROE. The Board will determine at the time of grant the number of performance share rights in two tranches of equal value, one of which will be subject to the TSR performance hurdle (TSR Performance Securities) and the other will be subject to the ROE performance hurdle (ROE Performance Securities). There will be no re-testing of either the TSR Performance Securities or the ROE Performance Securities. 18

 


(a) TSR Performance Securities The TSR hurdle is a weighted, composite TSR index (composite TSR index) for a peer group (peer group) comprising the ten top Australian financial services companies other than Westpac. Within the peer group, each of the other three major Australian banks has been allocated a 16.67% weighting, with the other seven companies each having a 7.14% weighting. The composite TSR index is calculated by multiplying each peer group member’s TSR for the four year performance period by its weighting, and then adding together the results of those ten calculations. Westpac’s TSR for the four year period is then compared to the composite TSR index. For 50% of the TSR tranche to vest, Westpac’s TSR must at least equal the composite TSR index. For 100% to vest, Westpac’s TSR must exceed the composite TSR index by an amount that, when added to the composite TSR index, simulates historic 75th percentile performance within the peer group (i.e. an additional 21.55, refiecting an extra 5% compound annual growth in TSR over the four year period). If Westpac’s TSR is between the composite TSR index and the composite TSR index plus 21.55, TSR Performance Securities will vest from 50% up to a possible 100% on a straight line basis between the composite TSR index and the composite TSR index plus 21.55. (b) ROE Performance Securities The ROE performance hurdle measures the average cash earnings return on average ordinary equity (Average Cash ROE) over the three year performance period. For the 2018 grant, the performance share rights are tested against the performance 19

 


Westpac 2017 Annual General Meeting hurdles on the third anniversary of the commencement of the performance period. If Westpac’s Average Cash ROE is at or above 14.25%, 100% of the ROE Performance Securities awarded to Mr Hartzer will qualify for vesting. If Westpac’s Average Cash ROE is equal to 13.25%, 50% of the ROE Performance Securities awarded to Mr Hartzer will qualify for vesting. If Westpac’s Average Cash ROE is between 13.25% and 14.25%, the number of ROE Performance Securities eligible for vesting will increase on a straight line basis from 50% to 100% of the total number of ROE Performance Securities awarded to Mr Hartzer. Westpac shares will be allocated to Mr Hartzer if the performance conditions attached to the ROE Performance Securities are satisfied. The ROE Performance Securities that qualify for vesting as noted above will vest on the fourth anniversary of the commencement of the performance period. 5. Cessation of employment 5.1 Deferred STI Subject to the Board’s discretion, all unvested restricted shares lapse when Mr Hartzer’s employment with Westpac ceases, except where the cessation of his employment: • is due to death, or total and permanent disablement; or • occurs in certain circumstances (such as a change of control). If Mr Hartzer’s employment ceases for any of those reasons, all unvested restricted shares he holds will vest. If Mr Hartzer is terminated for misconduct, all unvested restricted shares will be forfeited. If, in the Board’s opinion, Mr Hartzer has acted fraudulently or dishonestly, or is in material breach of his obligations, all of his 20

 


 

restricted shares (whether or not vested) that are subject to a holding lock under the CEO RSP will be forfeited, unless the Board determines otherwise. The Board may in certain circumstances also adjust the number of unvested restricted shares downwards, or to zero (in which case they will lapse). This may occur in order to respond to significant misconduct by Mr Hartzer which may result in significant financial and/or reputational impact to Westpac. 5.2 LTI Subject to the Board’s discretion, all unvested performance share rights lapse when Mr Hartzer’s employment with Westpac ceases, except where the cessation of his employment: • is due to his death, or total and permanent disablement; or • occurs in certain circumstances (such as a change of control where certain other conditions are met). If Mr Hartzer’s employment ceases for any of those reasons, all unvested performance share rights that he holds will vest. If, in the Board’s opinion, Mr Hartzer has acted fraudulently or dishonestly, or is in material breach of his obligations, the Board may determine that his unvested performance share rights under the CEO LTIP will lapse. The Board may in certain circumstances also adjust the number of unvested performance share rights downwards, or to zero (in which case they will lapse). This may occur in order to respond to significant misconduct by Mr Hartzer which may result in significant financial and/or reputational impact to Westpac. 21

 


Westpac 2017 Annual General Meeting 5.3 Termination benefits Early vesting of Mr Hartzer’s deferred STI and LTI in the circumstances outlined above may amount to the giving of a termination benefit. The Board also has discretion in relation to performance share rights and unvested restricted shares where Mr Hartzer ceases employment under certain circumstances that do not involve serious misconduct. This discretion enables the Board to vest or leave the performance share rights on foot, subject to the performance hurdles. In relation to the deferred STI, the discretion enables the Board to leave unvested restricted shares on foot and vest only on the expiry of the full term stated in the CEO RSP. The Board may determine to exercise this STI and LTI discretion in circumstances where Mr Hartzer’s employment ceases without fault on his part. In determining whether to exercise its discretion, the Board will take into account all relevant circumstances, which may include Mr Hartzer’s (and Westpac’s) performance against applicable performance hurdles at the date of cessation, as well as Mr Hartzer’s individual performance and the period that has passed from the date of grant to the date of cessation. The value of any termination benefits that may be given to Mr Hartzer by reason of early vesting of any of his 2018 deferred STI and LTI awards or the exercise of the Board’s discretion that his unvested restricted shares and performance share rights will not lapse, cannot be determined in advance. This is because, in addition to the factors listed above, the value at the date of cessation of employment will also depend upon: • the number of securities initially granted as part of a deferred STI or LTI award; • the date when, and circumstances in which, Mr Hartzer ceases employment; 22

 


• Westpac’s share price at the date of vesting; and • the number of unvested securities held by Mr Hartzer at the time of cessation. 6. Further information (a) No loans are, or will be, granted to Mr Hartzer in connection with participation in either the CEO RSP or the CEO LTIP. Details of any shares issued under the CEO RSP and performance share rights granted under the CEO LTIP will be published in each Annual Report relating to the period in which the securities were issued. The Annual Report will note that approval for issue of those securities was obtained under Listing Rule 10.14. Mr Hartzer is the only Director of Westpac entitled to participate in the CEO RSP and the CEO LTIP. If shareholders vote in favour of Item 3, no additional person who becomes entitled to participate in the CEO RSP or the CEO LTIP will participate until approval is obtained under Listing Rule 10.14. Mr Hartzer is not permitted to trade in securities received under the CEO RSP or CEO LTIP until they have vested. After vesting, any trading must comply with Westpac’s Securities Trading Policy. Restricted shares carry dividend and voting rights during the restriction period. Performance share rights do not receive dividends and do not have voting rights. If shareholder approval is obtained, the issue of restricted shares and performance share rights (and the shares underlying the performance share rights) will be approved for the purposes of all applicable requirements, including sections 200B and 200E of the Corporations Act and Listing Rule 10.14. (b) (c) (d) (e) 23

 


Westpac 2017 Annual General Meeting (f) Westpac will issue the restricted shares in or about December 2018 and performance share rights in December 2017, and in any event, no later than three years after the AGM. (g) Mr Hartzer was awarded 40,666 shares under the FY16 CEO RSP with a value of $1,302,710 and 211,548 share rights under the FY17 CEO LTIP with a value of $2,528,000. Further information on the CEO RSP and CEO LTIP is available in the Remuneration Report. Details on the voting exclusion which applies to this resolution can be found earlier in this Notice of Meeting. The Board (other than Mr Hartzer) unanimously recommends shareholders vote in favour of Item 3. The Chairman of the AGM intends to vote all available proxies in favour of this resolution. Item 4: Buy-Back of Westpac Convertible Preference Shares Approval is being sought for two buy-back schemes relating to the CPS to provide Westpac with flexibility in managing its capital base by enabling Westpac to acquire and cancel the CPS. Approval is being sought: • under Item 4(a), for the First Buy-back Scheme, which involves a buy-back of the CPS outside of the terms of the CPS but otherwise in accordance with the Corporations Act; and • under Item 4(b), for the Second Buy-back Scheme, which involves a buy-back of the CPS within the terms of the CPS. One or both of these buy-back schemes could be used and implemented at different times for up to 100% of the CPS on issue. Either buy-back scheme, if approved, would be conducted as an off-market selective buy-back. 24

 


The maximum number of CPS that may be bought back under either buy-back scheme is the total number currently on issue (11,893,605). Further detail on the buy-back schemes is provided below. The terms of the CPS are set out in the CPS Prospectus dated 24 February 2012 (Prospectus) which is available at www.westpac.com.au/investorcentre. 1. Background On 23 March 2012, Westpac issued 11,893,605 Westpac CPS at an issue price of A$100 each, raising approximately A$1.19 billion. The terms of the CPS (CPS Terms) can be found in Appendix B of the Prospectus. Unless otherwise defined, capitalised terms in this section have the same meaning as in the CPS Terms. Under the CPS Terms, if not redeemed, converted or bought back earlier, the CPS will mandatorily convert into ordinary shares of Westpac on the Scheduled Conversion Date. The Scheduled Conversion Date is 31 March 2020 and if the Conversion Conditions are not met on this date, the CPS will convert on the first Dividend Payment Date after 31 March 2020 on which the Conversion Conditions are satisfied. 2. What are the buy-back schemes and their terms (Items 4(a) and 4(b))? 2.1 First Buy-back Scheme – buy-back before first Optional Conversion/Redemption Date (Item 4(a)) Under Item 4(a), approval is being sought for Westpac to buy back up to 100% of the CPS at any time before the first Optional Conversion/Redemption Date of 31 March 2018. If Item 4(a) is passed and the First Buy-back Scheme is approved, and APRA’s prior written approval has been obtained, Westpac can make offers outside of the CPS Terms to all or some holders of CPS to buy back up to 100% of their CPS before the first Optional 25

 


Westpac 2017 Annual General Meeting Conversion/Redemption Date. Any buy-back offer will be made in writing, and CPS holders who wish to accept the offer must do so in writing by the deadline specified in the offer. The buy-back offer will be made on, and any resulting buy-back agreement will contain, the following key terms: • a CPS holder can accept the offer for all or some of their CPS (the Relevant CPS); and • on a buy-back date to be specified by Westpac (which will be before the first Optional Conversion/Redemption Date of 31 March 2018): – the Relevant CPS will be sold to Westpac; and – Westpac will pay to the CPS holder, for each of their Relevant CPS, a cash amount equal to the face value of A$100 and any dividend payment for the period from (but excluding) the previous dividend payment date until (and including) the buy-back date (subject to payment conditions). Any CPS bought back by Westpac will be cancelled. 2.2 Second Buy-back Scheme – buy-back on any Optional Conversion/Redemption Date within 12 months from the date of the AGM (Item 4(b)) Under the CPS Terms, Westpac may elect to Redeem some or all of the CPS on an Optional Conversion/Redemption Date (being any Dividend Payment Date for the CPS falling on or after 31 March 2018). Redemption of the CPS can be effected by way of a buy-back scheme contained in the CPS Terms. Under Item 4(b), approval is being sought for Westpac to buy-back up to 100% of the CPS on an Optional Conversion/Redemption Date within 12 months from the date of the 26

 


AGM (Redemption Date). If Item 4(b) is passed and the Second Buy-back Scheme is approved (and APRA’s prior written approval has been obtained), Westpac will have the option to Redeem by way of a buy-back, up to 100% of the CPS (Redeemed CPS) on a Redemption Date. The buy-back offer will be made on, and any resulting buy-back agreement will contain, the terms as required by the CPS Terms, including that on the Redemption Date: • the Redeemed CPS will be sold to Westpac; and • Westpac will pay to the CPS holder, for each of their Redeemed CPS, the face value of A$100 per Redeemed CPS plus any unpaid Dividends (subject to the payment conditions). The CPS Terms provide that if a Redemption involves a buy-back of CPS, each CPS holder agrees to accept the buy-back offer for their CPS to which an Early Conversion/ Redemption Notice relates and will be deemed to have sold those CPS to Westpac on the Redemption Date. Any CPS bought back by Westpac will be cancelled. 3. Why is shareholder approval being sought? Westpac is seeking flexibility to manage its capital base. Approval of Items 4(a) and 4(b) will give Westpac this flexibility. Under the Corporations Act, these selective buy-backs of CPS require the approval of Westpac shareholders (subject to voting restrictions). Westpac has decided it is best to seek this shareholder approval at the AGM rather than hold a separate extraordinary general meeting. Any shareholder approval obtained for the buy-back schemes under Items 4(a) and 4(b) does not limit the other methods in which Westpac 27

 


Westpac 2017 Annual General Meeting could Redeem the CPS (if at all) or affect any of Westpac’s other rights under the CPS Terms (including the ability to Transfer CPS to a Nominated Party under the CPS Terms prior to any buy-back). 4. Will any buy-back of CPS take place? No decision has been made by the Board to buy back the CPS. If Items 4(a) and 4(b) are approved by shareholders, the Board will only decide to undertake a buy-back if it is considered to be in the best interests of Westpac, it would not materially prejudice Westpac’s ability to pay its creditors and any such decision would be subject to APRA’s prior written approval. This may depend, among other things, on Westpac’s financial and capital position, conditions in domestic and international markets and changes in the prudential regulation of Westpac. 5. What are the advantages of approving the buy-back schemes? The approval of the buy-back schemes will give Westpac increased flexibility to acquire and cancel the CPS before the first Optional Conversion/Redemption Date or on a Redemption Date without needing to convene an extraordinary general meeting solely to approve a buy-back. 6. What are the disadvantages of the buy-back schemes? A potential disadvantage of the buy-back schemes is that upon completion, Westpac would have a reduced capital base to the extent of the capital bought back. However, Westpac will not conduct any buy-back unless it is satisfied that it would not have a material adverse impact on Westpac’s financial or regulatory capital position, or materially prejudice Westpac’s ability to pay its creditors. In addition, APRA’s prior written approval is required to undertake a buy-back. 28

 


7. What is the financial effect of the buy-back schemes on Westpac? Both buy-back schemes would require Westpac to make a payment of A$100 for each CPS bought back. The maximum cost of buying back 100% of CPS on issue as at the date of this Notice of Meeting would be A$1,189,360,500. Any unpaid Dividends, or, as applicable, the amount of Dividends that would otherwise be payable from the preceding dividend payment date up to (and including) the buy-back date, would also need to be paid subject to the payment conditions. 8. What is the source of funds for the buy-back schemes? Westpac maintains significant cash reserves and has other funding alternatives that could be used to conduct any buy-back of this size. The Board would consider the best alternatives to fund any buy-back. 9. What is the effect of buy-back schemes on the control of Westpac? A buy-back pursuant to Items 4(a) and 4(b) will result in up to all of the CPS being cancelled. Holders of CPS are entitled to vote (together with the holders of Westpac ordinary shares) on a limited number of matters as set out in the CPS Terms. The total number of votes capable of being cast by the holders of CPS on those limited matters would be up to 11,893,605, or less than 0.35% of the total votes able to be cast. Given the limited circumstances in which holders of CPS can vote, and the number of those votes set out above, the Board considers that any buy-back would have no effect on the control of Westpac. 29

 


Westpac 2017 Annual General Meeting 10. Who are the affected CPS holders? As at 30 September 2017, there were 17,988 registered holders of CPS. CPS are quoted on the ASX and held by a variety of investors predominantly based in Australia. 11. Do any Directors have any interests in CPS? No Director of Westpac has any interest in CPS, other than Mr Peter Hawkins who has an indirect interest in 1,370 CPS. There is no other information known to the Board which may be material to the decision on how to vote in relation to Items 4(a) and 4(b) which Westpac has not disclosed to its shareholders. A voting exclusion applies to Items 4(a) and 4(b), as set out in this Notice of Meeting. The Board unanimously recommends shareholders vote in favour of Items 4(a) and 4(b). The Chairman of the AGM intends to vote all available proxies in favour of Items 4(a) and 4(b). Item 5: Re-Election and Election of Directors Mr Robert Elstone is retiring from the Board in accordance with the Constitution and is not seeking re-election. Mr Lindsay Maxsted, Mr Peter Hawkins and Ms Alison Deans are retiring by rotation at this meeting in accordance with the Constitution and are offering themselves for re-election. 30

 


 

(a) Lindsay Maxsted DipBus (Gordon), FCA, FAICD, Age 63 Mr Maxsted has been an independent Non-executive Director of Westpac since March 2008 and Chairman since December 2011. Mr Maxsted is Chairman of Transurban Group, Managing Director of Align Capital Pty Ltd and a Director of BHP Billiton Limited, BHP Billiton plc and Baker Heart and Diabetes Institute. Mr Maxsted is also a Fellow of the Australian Institute of Company Directors. Mr Maxsted was formerly a partner at KPMG and was the CEO of that firm from January 2001 to December 2007. His principal area of practice prior to becoming CEO was in the corporate recovery field managing a number of Australia’s largest insolvency/workout/ turnaround engagements including Linter Textiles (companies associated with Abraham Goldberg), Bell Publishing Group, Bond Brewing, McEwans Hardware and Brashs. He is also a former Director and Chairman of the Victorian Public Transport Corporation. Mr Maxsted does not have a relationship with Westpac, other than as Chairman, as a customer and as a securityholder. Mr Maxsted does not have a relationship with any other Director. Mr Maxsted is Chairman of the Board Nominations Committee and a member of the Board Audit and Board Risk & Compliance Committees. The Board considers Mr Maxsted to be an independent director. Following a peer review, the Board (other than Mr Maxsted) unanimously recommends shareholders vote in favour of the re-election of Mr Maxsted to the Board. The Chairman of the AGM intends to vote all available proxies in favour of this resolution. 31

 


Westpac 2017 Annual General Meeting (b) Peter Hawkins BCA (Hons.), SF Fin, FAIM, ACA (NZ), FAICD, Age 63 Mr Hawkins has been an independent Non-executive Director of Westpac since December 2008. Mr Hawkins will reach nine years tenure as a Westpac Director at the date of the AGM. In considering the appropriate mix of skills and experience on the Board, and as part of the Board’s succession planning, the Board has agreed with Mr Hawkins to exercise its discretion to extend the tenure of Mr Hawkins beyond the nine year limit set out in Westpac’s Board Renewal Policy. Under this Policy, a Director whose tenure is extended beyond nine years is required to stand for re-election each subsequent year. Mr Hawkins is a Director of Mirvac Group, Liberty Financial Pty Ltd and Crestone Holdings Limited. Mr Hawkins is also a member of the Bank of Melbourne Advisory Board. Mr Hawkins’ career in the banking and financial services industry spans over 40 years in Australia and overseas at both the highest levels of management and directorship of major organisations. Mr Hawkins has held various senior management and directorship positions with Australia and New Zealand Banking Group Limited from 1971 to 2005. He was also previously a Director of BHP (NZ) Steel Limited, ING Australia Limited, Esanda Finance Corporation, Visa Inc, Murray Goulburn Co-operative Co. Limited, MG Responsible Entity Limited (the responsible entity for ASX listed MG Unit Trust) and Clayton Utz. Mr Hawkins does not have a relationship with Westpac, other than as a Director, as a customer and as a securityholder. Mr Hawkins does not have a relationship with any other Director. 32

 


Mr Hawkins is Chairman of the Board Technology Committee and a member of the Board Audit, Board Nominations and Board Risk & Compliance Committees. The Board considers Mr Hawkins to be an independent director. Following a peer review, the Board (other than Mr Hawkins) unanimously recommends shareholders vote in favour of the re-election of Mr Hawkins to the Board. The Chairman of the AGM intends to vote all available proxies in favour of this resolution. (c) Alison Deans BA, MBA, GAICD, Age 49 Ms Deans has been an independent Non-executive Director of Westpac since April 2014. Ms Deans is a Director of Cochlear Limited, kikki.K Holdings Pty Ltd and SCEGGS Darlinghurst Limited. Ms Deans has more than 20 years of experience in senior executive roles focused on building digital businesses and digital transformation across e-commerce, media and financial services. During this time, Ms Deans served as the CEO of eCorp Limited, CEO of Hoyts Cinemas and CEO of eBay, Australia and New Zealand. Most recently, she was the CEO of a technology-based investment company netus Pty Ltd. Ms Deans was a Director of Insurance Australia Group Limited from February 2013 to October 2017 and an Independent Director of Social Ventures Australia from September 2007 to April 2013. Ms Deans does not have a relationship with Westpac, other than as a Director, as a customer and as a securityholder. Ms Deans does not have a relationship with any other Director. 33

 


Westpac 2017 Annual General Meeting Ms Deans is a member of the Board Risk & Compliance and Board Technology Committees. The Board considers Ms Deans to be an independent director. Following a peer review, the Board (other than Ms Deans) unanimously recommends shareholders vote in favour of the re-election of Ms Deans to the Board. The Chairman of the AGM intends to vote all available proxies in favour of this resolution. (d) Nerida Caesar BCom, MBA, GAICD, Age 53 Ms Caesar has been an independent Non-executive Director of Westpac since September 2017. Ms Caesar is a Director of the NSW FinTech hub and Stone & Chalk. She is also a member of the University of Technology Vice Chancellor’s Industry Advisory Board, a member of the Federal Government’s FinTech Advisory Group and a Non-executive Director of Genome.One, a wholly owned subsidiary of the Garvan Institute of Medical Research. Ms Caesar has 30 years of broad-ranging commercial and business management experience. Most recently, Ms Caesar was Group Managing Director and Chief Executive Officer, Australia and New Zealand, of Equifax, formerly Veda Group Limited from February 2011. Ms Caesar was also formerly Group Managing Director, Telstra Enterprise and Government, responsible for Telstra’s corporate, government and large business customers in Australia as well as the international sales division. She also worked as Group Managing Director, Telstra Wholesale, and prior to that held the position of Executive Director National Sales where she was responsible for managing products, services and 34

 


customer relationships throughout Australia. Prior to joining Telstra, Ms Caesar held several senior management and sales positions with IBM within Australia and internationally over a 20 year period, including as Vice President of IBM’s Intel Server Division for the Asia Pacific region. Ms Caesar does not have a relationship with Westpac, other than as a Director and as a customer. Ms Caesar does not have a relationship with any other Director. Ms Caesar is a member of the Board Risk & Compliance and Board Technology Committees. The Board considers Ms Caesar to be an independent director. Following a peer review, the Board (other than Ms Caesar) unanimously recommends shareholders vote in favour of the election of Ms Caesar to the Board. The Chairman of the AGM intends to vote all available proxies in favour of this resolution. 35

 


Westpac 2017 Annual General Meeting Attending the AGM The Darling Harbour Theatre, Level 2 International Convention Centre Sydney 14 Darling Drive Sydney New South Wales 2000 The International Convention Centre Sydney is located in Sydney’s Darling Harbour, a short walk from Sydney’s central business district and approximately eight kilometres from Sydney airport. The International Convention Centre Sydney has multiple public access points. The closest entrance to the Darling Harbour Theatre is the ground floor at Iron Wharf Place where the AGM registration will be located. Facilities for people with disabilities are provided throughout the venue and all car parks and buildings are wheelchair accessible. The best drop off area for mobility impaired guests is the ground floor entrance at Iron Wharf Place. Location How to get there By car The International Convention Centre Sydney has two 24 hour car parking stations; Sydney Exhibition Centre Car Park and Sydney Theatre Car Park. Both carparks can be accessed via 14 Darling Drive. It is recommended that AGM visitors park in the Exhibition Centre car park for ease of access to the Darling Harbour Theatre. Taxi ranks are located at Iron Wharf Place next to Harbourside Shopping Centre and Zollner Circuit on the Southern end of the International Convention Centre. Both are accessed via Darling Drive. 36

 


ST T STREET PLACE HALL Circuit 37 D HARBOURSIDE SHOPPING CENTRE WYNYARD NT L K NG SSS WHARFCBD Market St IRON WHARF Druitt St CONVENTION TOWN EXHIBITION Zollner U T M O TRA N BUS LIGHT RAIL FERRY PARK NG TAXI TU M BAL O N G P ARK HARBOUR DARLING R E C U D HARBOUR DARLING

 


Westpac 2017 Annual General Meeting By train The International Convention Centre Sydney is a 10 minute walk from the Central or Town Hall railway stations. Regular train services operate between Sydney airport and these stations, with a travelling time of approximately 20 minutes. By bus Bus routes 389 and 501 stop on Harris Street near Allen Street, a 10 minute walk from the International Convention Centre Sydney. By light rail The light rail runs between Central Station and Dulwich Hill in the inner west and stops at the International Convention Centre Sydney. By boat Direct ferry services to Darling Harbour operate from Circular Quay, King Street Wharf and Pyrmont Bay Wharf. Water Taxis to Darling Harbour depart from The Rocks, Circular Quay, The Opera House and Luna Park and Captain Cook Cruises operates services between Darling Harbour Convention Wharf, Barangaroo, King Street Wharf No.1 and Circular Quay. Further information about travel to the venue and parking can be found at www.iccsydney.com.au/visit-icc-sydney or by calling (+61 2) 9215 7100. For public transport information and timetables visit www.transportnsw.info or call 131 500. Venue security Security arrangements will be in place at the venue, including bag searches prior to AGM entry. Cloakroom facilities A cloakroom is available at the venue’s customer service desk and is located on the ground floor, just to the left of the Westpac AGM registration. 38

 


Webcast For those shareholders unable to attend in person, the AGM will be webcast live at www.westpac.com.au/investorcentre and an archive of the AGM will also be subsequently available. Further information For further information regarding the Westpac AGM, please contact Link on (+61) 1800 804 255 (toll free within Australia). The Westpac Group 2017 Notice of Meeting is printed on PEFC certified paper. Compliance with the certification criteria set out by the Programme for the Endorsement of Forest Certification (PEFC) means that the paper fibre is sourced from sustainable forests. 39

 


NOM2017 1017

 

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0001104659-17-067114.txt   Complete submission text file   21654036
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