Westpac Banking Corporation (WBC)

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General Information
Company Name: Westpac Banking Corporation
Stock Code: WBC
Website: www.westpac.com.au
GICS Sub-Industry: Diversified Banks
Market Cap ($M): 107,138
Equiv. Shares (M): 3,109

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
$ 34.460 $ 34.140 $ 34.540 $ 34.140 $ 34.460 4,922,656 0%

Current Broker Consensus Recommendation more
Recommendation: Hold (3)
Recommendation Date: 29th Oct 2014
Brokers Surveyed: 5

Company Overview

Business Description:
Westpac Banking Corporation (WBC) is Australia's oldest banking and financial services group, with branches and operations throughout Australia, New Zealand and the near Pacific region as well as offices in key financial centres around the world including London, New York, Hong Kong and Singapore. Westpac has 3 key customer facing divisions comprising Australian Financial Services (Westpac RBB, St George Bank and BTFG), Westpac Institution Bank and Westpac New Zealand.

Strategy Analysis:
Group strategy is anchored in the commitment to conservatively manage risk across all areas of business, following the near-death experience in the early 1990s. WBC’s customer-focused strategy aims to capture an increasing share of business from its Australian and New Zealand banking and wealth management customer base leveraging multi-brands. WBC established itself as an integrated financial services group in the early 2000s with the successful expansion into wealth management, acquiring Rothschild, BT Financial Services and Hastings. WBC diversified domestically by acquiring St George Bank in 2008, activating its regional banking strategy and providing access to a broader customer base and more exciting growth options. WBC’s strong operational discipline, quality assets and diversified funding base provide a good platform to leverage market share gains achieved in the midst of a global financial crisis. Credit market uncertainty stifled competition from smaller banks, foreign banks and non-bank lenders, allowing WBC to press its scale advantage over weaker competitors and capture market share. The acquisition of St George Bank increased scale and the re-launch of the Bank of Melbourne brand in July 2011 further strengthened the multi-brand approach. Westpac Banking Corporation reported NPAT down 15% to $5.97bn for the year ended 30 September 2012. Statutory net profit was lower over the year principally as a result of a large one-off tax benefit from St.George tax consolidation. Revenues from ordinary activities were $17.98bn, up 6% from last year. Diluted EPS was 190.5 cents compared to 223.6 cents last year. The net operating cash inflow was $18.48bn compared to an outflow of $12.01bn in the pcp. The final dividend declared was 84 cents, taking the full year dividend to 166 cents compared with 156 cents last year. Looking ahead, the Company expects continued modest credit growth and strong saving levels. The Company reported volatility in global markets is likely to continue and as a result of the structural changes that are now occurring, both overseas and domestically, the operating environment will remain challenging.

Financial Summary
Year to Sep NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2015  F 8,267.1 265.0 7.5 13.0 199.0 5.8 100.0
2014  F 7,662.5 246.4 7.6 14.0 185.0 5.4 100.0
2013  A 7,097.0 228.9 6.0 12.6 174.0 6.0 100.0
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F
ANZ Bank (ANZ) $90,776 M -0.0092 0.1760 0.0495 15.2235 12.9457 12.3356 4.98 5.37 5.64
Bendigo Adelaide Bnk (BEN) $5,487 M 0.1222 0.1687 0.0693 14.5383 12.4399 11.6337 5.26 5.55 5.88
Commonwealth Bank (CBA) $129,025 M 0.1201 0.0600 0.0518 15.0168 14.1664 13.4690 5.04 5.30 5.58
National Aust. Bank (NAB) $81,336 M 0.0508 -0.1248 0.2760 13.8741 15.8521 12.4237 5.53 5.75 6.03
Westpac (WBC) $106,236 M 0.0657 0.0867 0.0126 15.2286 14.0139 13.8396 5.68 5.54 5.56

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth
WBC 0.86 14.1 2.30 2.89
Market 0.93 15.6 1.24 1.81
Sector 0.87 14.0 1.37 1.61

Name Position Start Date
Ms Gail Patricia Kelly Managing Director, Chief Executive Officer 01 February 2008
Mr Lindsay Philip Maxsted Non-Executive Chairman 01 March 2008
Ms Elizabeth Bloomfield Bryan Non-Executive Director 06 November 2006
Mr Robert George Elstone Non-Executive Director 01 February 2012
Mr Peter John Oswin Hawkins Non-Executive Director 01 December 2008
Mr Peter Ralph Marriott Non-Executive Director 01 June 2013
Ms Ann Darlene Pickard Non-Executive Director 01 December 2011
Mr Ewen Crouch Non-Executive Director 01 February 2013
Ms Alison Deans Non-Executive Director 01 April 2014

Name Position
Brian Hartzer Chief Executive Officer, Australian Financial Services
Brad Cooper Chief Executive Officer, BT Financial Group
George Frazis Chief Executive Officer, St.George Banking Group
Peter Clare Chief Executive Officer, Westpac New Zealand Limited
Philip Coffey Chief Financial Officer
John Arthur Chief Operating Officer
Greg Targett Chief Risk Officer
John Lindsay Arthur Company Secretary
Tim Hart Company Secretary
Christine Parker Group Executive, Human Resources & Corporate Affairs
Rob Whitfield Group Executive, Westpac Institutional Bank
Jason Yetton Group Executive, Westpac Retail & Business Banking

Calendar of Events
Date Event
04 May 2015 Report (Interim)
13 November 2014 Report (Annual)
12 November 2014 Report (Annual)
03 November 2014 Report (Prelim)
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.


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