#1Westpac New Zealand Limited Investor Update May/June 2016 W#221 Disclaimer The material contained in this presentation is intended to be general background information on Westpac Securities NZ Limited, Westpac New Zealand Covered Bond Limited and Westpac New Zealand Limited and their activities. It should not be reproduced, distributed or transmitted to any person without consent of Westpac New Zealand Limited and is not intended for distribution in any jurisdiction in which such distribution would be contrary to local law or regulation. The information is supplied in summary form and is therefore not necessarily complete. It does not constitute a prospectus, offering memorandum or other offering document or an offer of securities. Also, it is not intended that it be relied upon as advice to investors or potential investors, who should consider seeking independent professional advice depending upon their specific investment objectives, financial situation or particular needs. The material contained in this presentation may include information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. This presentation is directed only at persons who (i) have professional experience in matters relating to investments; or (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (as amended); or (iii) are outside the United Kingdom (all such persons together being referred to as "relevant persons"). This document must not be acted on or relied on by persons who are not relevant persons. All amounts are in New Zealand dollars unless otherwise indicated. All financial data in this presentation is as at 31 March 2016 unless otherwise stated. This presentation contains statements that constitute "forward-looking statements" within the meaning of section 21E of the United States Securities Exchange Act 1934. Forward-looking statements are statements about matters that are not historical facts. The forward-looking statements include statements regarding our intent, belief or current expectations with respect to our business and operations, market conditions, results of operations and financial condition. We use words such as 'will', 'may', 'expect', 'indicative', 'intend', 'seek', 'would', 'should', 'could', 'continue', 'plan', 'probability', 'risk', 'forecast', 'likely', 'estimate', 'anticipate', 'believe', or other similar words to identify forward-looking statements. These statements reflect our current views with respect to future events and are subject to change, certain risks, uncertainties and assumptions which are, in many instances, beyond our control and have been made based upon management's expectations and beliefs concerning future developments and their potential effect upon Westpac Securities NZ Limited, Westpac New Zealand Covered Bond Limited and/or Westpac New Zealand Limited. Should one or more of the risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from the expectations described in this presentation. Factors that may impact on the forward-looking statements made include those described in the section entitled "Principal risks and uncertainties" in the Management Report in the Westpac Securities NZ Limited Financial Statements for the six months ended 31 March 2016. When relying on forward-looking statements to make decisions with respect to Westpac Securities NZ Limited and/or Westpac New Zealand Limited, investors and others should carefully consider such factors and other uncertainties and events. We are under no obligation, and do not intend, to update any forward-looking statements contained in this presentation. PRIVATE & CONFIDENTIAL#3Agenda Westpac New Zealand Limited (WNZL) Overview New Zealand Economy Wholesale Funding and Liquid Assets New Zealand Mortgage Portfolio WNZL Covered Bond Programme Appendix 4 11 20 24 29 34#44 | An important part of the Westpac Group Westpac Group New Zealand W Westpac Australia's First Bank Westpac InstitutionalBank Australia st.george BankSA RAN BT Financial Group Asgard Westpac New Zealand Limited (WNZL) Westpac Securities NZ Limited (WSNZL) BT Funds Management (NZ) Westpac Life New Zealand Locally incorporated Bank, wholly owned but not guaranteed by Westpac Banking Corporation Comprises Westpac's consumer, business and institutional banking operations in NZ Financial performance disclosed via quarterly WNZL Disclosure Statement (DS) Guarantor for WSNZL funding programmes A wholly owned subsidiary of WNZL Unconditional and irrevocable guarantees of funding programmes from WNZL Provides offshore wholesale funding for WNZL through its London branch PRIVATE & CONFIDENTIAL#55 | Westpac New Zealand Limited (WNZL) Highlights Balance sheet Areas of interest Covered Bond program ➤ Rated AA- / Aa3 / AA-, with Stable outlook Strong domestic franchise - - 20% consumer lending market share¹ 21% deposit market share¹ ➤ Cash earnings of NZ$445m, up 2% on 1H15 CET1 ratio 11.6% (RBNZ basis) ➤ Customer deposit funding 70% Liquid assets $12.1bn Impaired loans to total committed exposures 35bps ➤ Residential mortgage +90 days delinquencies 15bps ► Dairy sector Auckland housing market ➤ Covered Bond Program Cover Pool 1 Source RBNZ March 2016. PRIVATE & CONFIDENTIAL#66 | Sound financial performance WNZL Cash Earnings 1H15 – 1H16 (NZ$m) Increased insurance and wealth income offset by lower customer fees Increased investment including brand and customer service transformation 1H16 Cash Earnings Results (NZ$m) 1H16 % Change 1H16-1H15 Total income 1,082 2% Expenses (457) (8%) Core earnings 625 (1%) (profit before provisions) Impairment charges (9) (71%) Cash earnings 445 2% Net interest margin 2.15% (8bps) 437 Balance sheet and asset quality Loans $71.7bn 8% Deposits and other borrowings $54.9bn 7% Deposit to loan ratio 76.6% (76bps) Impaired assets to TCE 35bps (20bps) Loans up 8%, Deposits up 7% offset by NIM compression on mortgage lending 26 26 12 (33) Asset quality improved across business and consumer segments. Stress emerging in Agri 22 22 445 1H15 Cash earnings up $8m / 2% to $445m PRIVATE & CONFIDENTIAL#77 | Balanced volume growth across portfolio Mortgages Business Credit cards 0.8x (1.0x (0.8x Retail deposits 1.1x Deposit to loan ratio (%) 77.3 8.0% 8.8% 9.2% 1.6% 8.2% 7.5% 6.3% 1.2% 75.2 Peer 76.6 average¹ 72% System WNZL System WNZL System WNZL System WNZL Source: RBNZ, 1H16 growth Mortgage and Consumer 90+ days delinquencies (%) 1H15 2H15 1H16 1 Source Company Reports. Peer average as at 31 December 2015. Business stressed to TCE (%) 1.2 0.8 0.4 0.0 Sep-10 -Mortgages 90+ days past due Consumer 90+ days past due Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 0.56 0.15 1.55 1.47 1H15 2H15 1H16 1.66 PRIVATE & CONFIDENTIAL#88 | Strong capital position Capital adequacy ratios (RBNZ basis) Mar-16 WNZL Target levels Regulatory minimum and capital buffers Headroom to regulatory minimum and capital buffers CET1 Capital (incl. Capital Conservation Buffer (CCB)) 10.8% 7.5% 7.0% 3.8% Tier 1 Capital (incl. CCB) 10.8% 10.0% 8.5% 2.3% Total Regulatory Capital (incl. CCB) 13.1% 11.0% 10.5% 2.6% WNZL capital ($m) as at 31 March 2016 WNZL Regulatory capital ratios (%) Common Equity Tier One (CET1) capital ratio Tier 2 capital ratio $6,478m Other* $2,728m $6,768m 15.0% Tier Two $1,153m 10.0% CET1 $5,615m Share Capital $3,750m 5.0% Shareholders' equity WNZL regulatory capital *Other: retained profits of $2,922m, AFS reserve of $11m and Cash Flow Hedge reserve of ($83m) 13.4% 13.1% 12.3% 12.2% 11.9% 11.6% 2.3% 2.3% 11.1% 10.8% 0.0% FY13 1H14 FY14 1H15 FY15 1H16 PRIVATE & CONFIDENTIAL#9Asset quality in good shape Business stressed exposures as a % of New Zealand business total committed exposure ■Impaired ■90+ days past due not impaired ■Watchlist & substandard 16.2 15.6 13.2 14.4 12.8 7.7 9.6 6.8 ■AGRICULTURE, FORESTRY & FISHING ■PROPERTY ■MANUFACTURING WHOLESALE TRADE ■CONSTRUCTION OTHER 38.7 21.6 4.9 4.4 3.8 3.7 4.1 3.3 7.1 3.6 3.4 0.3 3.2 4.4 0.2 0.4 2.9 2.3 2.3 2.4 2.9 0.1 3.4 0.2 0.1 14.4 16.7 2.6 2.2 0.0 1.4 1.5 0.1 0.1 0.5 0.8 0.9 1.1 0.2 0.8 0.1 0.7 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 1 Large reduction in stressed exposures from Sep 2011 to Sep 2012 due primarily to transfer of WIB assets during 2012.#1010 | Portfolio is well diversified $35,000 $30,000 ➤ Overall portfolio mix remains well diversified across all regions, with the greatest proportion of exposure to NZ TCE by region ($ million) Home Loan Other Consumer Property Finance AgriBusiness Other Business the Auckland region, consistent with population demographics $25,000 $20,000 $15,000 $10,000 $5,000 $0 Auckland Christchurch Wellington Rest of North Overseas Island ➤ WNZL portfolio is well balanced between Consumer and Business lending Retail portfolio make up just over 50% of the total lending portfolio, primarily Mortgages (secured) Business and Institutional Lending represent 45% of the total lending portfolio with Agriculture, Finance and Property being the largest three sectors, consistent with the NZ economy industry mix Portfolio breakdown by TCE (%) Credit Cards 4.7% Other Retail 0.8% Finance 6.7% Mortgage 50.0% Transaction Managed, 44.6% (Business Banking @ 21.4%; Institutional/ WIB @ 23.2%) Property 7.2% Rest of South Institutional Island Government 3.3% Manufacturing 4.0% Utilities 2.5% Wholesale Trade 2.0% Transport & Storage 2.2% Agriculture, Forestry & Fishing 8.1% Others 8.6% PRIVATE & CONFIDENTIAL#11New Zealand Economic Outlook#12New Zealand economy Key economic statistics FY15 FY16f Change NZD/USD 1.00 GDP annualised average growth 3.0% 2.7% (30 pts) 0.90 0.80 Inflation rate 0.4% 0.5% 10 pts ми 0.70 Official cash rate (OCR) 2.5% 2.0% (50 bps) 0.60 0.50 Westpac forecast Unemployment rate 6.0% 5.7% (30 pts) 0.40 ⚫NZD/USD 0.30 Dairy payout (ex dividend) 1,2 $4.40 $4.00 ($0.40) 2003 2006 2009 2012 2015 2018 Source: RBNZ, Westpac Economics New Zealand unemployment rate (%) GDP growth (%) 8 8 % 12 Qtr % chg Annual average % change Westpac forecast 11 6 6 10 10 4 N 9 8 7 % 12 Westpac Forecast 11 10 10 9 8 7 6 5 LO 5 4 3 3 1990 1993 1996 1999 2002 2005 2008 2011 Source: Statistics NZ, Westpac Economics 2014 2017 0 6 LO 2 2 0 -2 -4 T 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source: Statistics NZ, Westpac Economics 1 Westpac NZ Economics forecast (ex dividend), Fonterra forecast is $3.90/kg. 2 Seasons ended May. 12 | + PRIVATE & CONFIDENTIAL#1313 | NZ Export Markets Commodity (%) 1% 1% 2% 2% 8% • • 19% 3% 6% 4% 5% 7% 17% ■Dairy ■Tourism ■Meat and other Animal Destination (%) Products Commercia Services ■Logs, wood and wood articles 6% Education Fruit and Vege 14% 7% Air transport Engineering, Medical & Teleco Wine ■Fish 11% Wool Crude oil Other 9% 3% 2% 4% 6% 17% 24% ■Australia E China & Hong Kong United States & Canada ■S.E.Asia ■Japan United Kingdom Eurozone ■Korea, Peoples Republic of Middle East 22% ■India Dairy is significant but represented only 17% of NZ exports in 2015 (down from 28%) All sectors benefit from weakening currency particularly immediate improvement for Tourism and Education • NZ has strong trading relationships benefiting from continued urbanisation in broad Asia. • North American recovery provides further lift for non-dairy exports. PRIVATE & CONFIDENTIAL#1414 | Conditions remain challenging for dairy sector • Global dairy prices have fallen around 20% over the last year Prices have been weighed down by lacklustre demand from China and strong growth in global supply, especially out of Europe Westpac expect the sustained period of lower prices will eventually lead to slower growth in global milk supply. However, this is taking some time. Westpac payout forecasts assume dairy prices remain around current levels until late 2016 before gradually starting to improve While dairy prices remain in the doldrums, prices for some of New Zealand's other agricultural commodity exports have been holding up better. In particular horticulture, beef and wine sectors have been doing well due to decent demand conditions in advanced economies as well as a lower NZ dollar Dairy payout and dividend¹ $10 Kg Ms $8 $6 $4 EA LA LA 69 $2 $0 ■Dividend ■Milk price Kg Ms $10 Westpac forecast $8 $6 - $4 $2 $0 NZ export commodity price index (NZD) 250 Indexed to 100 Jan 2000 Indexed to $/KgMs 100 Jan 2000 250 $9 Source: Westpac Economics Break-even dairy payout Average Break-even effective payout --Fonterra Payout (including dividends) $/KgMs Westpac $9 forecast $8 $8 200 200 $7 $7 $6 $6 150 150 $5 $5 $4 $4 100 100 $3 $3 50 $2 $2 50 Meat, Skins and Wool Horticultural Products - Dairy Products Seafood 50 $1 $1 0 0 $0 $0 Jan-00 Feb-02 Mar-04 Apr-06 May-08 Jun-10 Jul-12 Aug-14 Source: ANZ, Westpac 1 Westpac NZ Economics forecast (ex dividend), Fonterra forecast is $3.90/kg. 2 Seasons ended May. 2001-02 2003-04 2005-06 2007-08 2009-10 2011-12 2013-14 2015-16 Source: RBNZ, DairyNZ, Westpac, Fonterra PRIVATE & CONFIDENTIAL#15Challenging conditions in dairy sector Agribusiness portfolio total committed exposure by sector (%) 1 Commentary WNZL is underweight the dairy sector Focus on quality operators with efficient, lower cost models Within the main regions farms can operate on a 'low cost farming model' due to climate / soil types ➤ Majority of dairy security assets held in prime geographic farming areas New Zealand's cost structure at the lower end of global competitors Global dairy prices remain below long run average with challenging conditions for the dairy sector, reflected in increase in stressed exposures 7 17 ■Dairy products ■Grain, sheep and beef cattle ■Horticulture and fruit growing Other livestock farming 71 ■ Other Agribusiness portfolio 12.5 Dairy EAD (NZ$m)¹ Peer 1 6.4 9.0 Peer 2 Peer 3 Mar-15 Sep-15 Mar-16 Total committed exposure (TCE) $7.3b $7.8b $8.1b Agriculture as a % of TCE 7.7% 7.9% 7.9% 5.9 % of portfolio graded as 'stressed' 2.88% 3.92% 7.81% Westpac % of portfolio in impaired 0.33% 0.34% 0.32% 1 Source Company Reports. Peer 1, Peer 3 and Westpac at 31 March 2016. Peer 2 represents total lending assets and is an estimate at June 2015 based on company reports and presentations.#1616 | Reserve Bank of New Zealand - Stress testing Five largest Dairy sector lenders subject to stress testing Two scenarios were tested Scenario 1 assuming that the dairy payout recovers to $5.25 per kilogram of milk-solids by the 2017/18 season and a fall in dairy land prices of 20 percent Scenario 2, the dairy payout was assumed to fall to $3 in 2015/16 and remain below $5 until the 2019/20 season with a fall in land prices of 40 percent. RBNZ conclusions On average, banks reported losses under the two scenarios ranging between 3 to 8 percent of their total dairy sector exposures. Bank lending to the dairy sector stands at around $38 billion, which is approximately 10 percent of the banking system's total lending. We would expect losses of the order seen in the stress scenarios to be absorbed largely through lower bank earnings rather than through an erosion of bank capital. The test results suggested that in the shorter term, banks would increase their dairy lending in order to support existing borrowers facing negative cash flow, before facing a longer term rise in loan losses if there were a prolonged dairy sector downturn. PRIVATE & CONFIDENTIAL#17Housing sales have slowed, but prices picking up Total New Zealanders Westpac forecast 000s 75 ⚫ Other 50 60 New Zealand house prices by region (index) Net Migration (ooos) 200 200 Wellington 000s 75 180 Christchurch 180 Index 100 in 2007 Other Nth Island 160 160 Other Sth Island Auckland 140 140 120 120 Index 100 in 2007 50 50 25 45 0 100 80 Jan-07 100 -25 80 -50 Jan-09 Jan-11 Jan-13 Jan-15 2000 2003 25 0 24 -25 -50 2006 2009 2012 2015 2018 Source: REINZ, Westpac Economics Residential building consents by value (seasonally adjusted) Source: Statistics NZ, Westpac Housing turnover 500 Canterbury Rest of NZ 400 Auckland 500 NZ$m sales 7,000 400 Mortgage approvals, value (left axis) House sales, number (right axis) 10,000 9,000 6,000 8,000 NZ$ Millions 300 300 200 200 NZ$ Millions 5,000 7,000 6,000 4,000 5,000 100 100 3,000 4,000 0 Jan-07 0 2,000 3,000 Jan-09 Jan-11 Jan-13 Jan-15 Source: Statistics NZ 2008 2009 2010 2011 2012 2013 2014 2015 Source: RBNZ, REINZ 2016 17 | PRIVATE & CONFIDENTIAL#1818 | NZ Immigration and Tourist Arrivals Country 2014 2015 2016 Region 2014 2015 2016 Australia Asia 21,146 India 23,662 7,350 13,342 25,767 29,093 38,937 43,800 Oceania 13,486 24,541 27,711 30,242 United Kingdom 14,006 13,647 13,445 Europe 23,061 23,887 24,315 Americas China, People's Republic of 8,603 7,565 8,021 9,155 10,014 11,722 Africa and the Middle East 2,527 3,066 4,081 Philippines 2,923 4,220 5,476 United States of America 3,981 3,908 4,326 Germany 3,354 3,639 4,033 France 2,524 3,586 3,932 South Africa 1,420 1,742 2,758 The record annual gain in migrants was driven by an increase in migrant arrivals. Migrant arrivals were 124,100 in the March 2016 year, up 10,300 (9 percent) from the March 2015 year. Canada 1,928 2,213 2,640 Japan 1,990 2,183 2,215 Korea, Republic of 1,752 1,901 2,083 New Zealand citizens returning to live in New Zealand accounted for one-quarter of all migrant arrivals. In comparison, migrant departures (56,400) were down 1,100 (2 percent). Visitors Oceania Asia 2014 2015 2016 1,359,120 575,200 1,415,888 1,514,080 681,568 814,640 Europe Americas Africa and the Middle East 429,296 451,296 487,216 285,664 307,024 348,192 38,192 41,312 43,136 Visitor arrivals - 3.26 million in the March 2016 year, (up 10%) Source: Immigration New Zealand PRIVATE & CONFIDENTIAL#1919 | • . 1.5 2.5 2 3.5 3 4.5 4 New Zealand interest rate environment 5 NZ Interest Rates May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 1yr OIS Swap2Y · ΕΤ-ΛΟΝ Feb-14 May-14 Aug-14 -Swap5Y OCR Nov-14 Feb-15- May-15 Aug-15 Nov-15- Feb-16 Low inflation expectations, coupled with a slowdown in the Dairy sector, has seen the RBNZ have embarked on an easing cycle The RBNZ continues to signal room for further falls in interest rates dependent on data over coming months • Market pricing infers OCR at or below 2 % by year end PRIVATE & CONFIDENTIAL#20Wholesale Funding and Liquid Assets#21Targeting a sustainable wholesale funding profile Funding composition (%) 24 8858 6639 64 67 140 33 5839 59 69 86300 8 4 2 Wholesale Offshore <1Yr 8 3 3 g Wholesale Onshore <1Yr 68 70 Wholesale Offshore >1Yr Wholesale Onshore >1Yr Intercompany Debt ■ Equity FY12 FY13 FY14 FY15 1H16 Core funding ratio (%) Customer Deposits Core Funding Ratio RBNZ Core Funding Limit 90.0% 80.0% 70.0% 21 | Term maturities as at 31 March 2016 ($bn) 4.5 NZD equivalent ($bn) 1.5 30 3.0 60.0% FY11 FY12 FY13 FY14 FY15 1H16 DMTN ΠΕΜΤΝ Covered 0.0 2016 2017 2018 2019 2020 2021 2022+ Commentary ➤ Reduced reliance on short term funding driven by strong deposit growth ➤ Term maturities well spread for manageable annual refinancing task Core Funding Ratio comfortably above the RBNZ minimum of 75% ➤ The Core Funding Ratio represents the amount of stable funding, including all funding with residual maturity longer than one year, Tier 1 and other stable funding as defined by the RBNZ, divided by total loans and advances PRIVATE & CONFIDENTIAL#22Well balanced and diversified funding Wholesale funding (%) Wholesale funding by currency (%) 22| 10 26 18 39 Funding mix (%) 8 5 16 Domestic Medium Term Notes 5 15 26 NZ Certificates of Deposit 7 Euro Medium Term Notes 71 14 US Commercial Paper Covered Bonds Customer Deposits ■Equity Wholesale Onshore Wholesale Offshore 13 41 NZD USD ■ EUR ■GBP CHF Commentary Funding composition well balanced between domestic and offshore wholesale programmes ➤ Lower reliance on US Commercial Paper Focus for wholesale funding will be consistent issuance into established markets with diversification within current geographies PRIVATE & CONFIDENTIAL#2323 | Stable and high quality liquid assets Liquid assets ($bn) 15.0 HQLA RMBS Liquid assets as % short term funding 240% 10.0 4.0 4.0 160% 4.0 4.0 4.0 4.0 209% 193% 5.0 80% 157% 140% 7.1 7.2 7.9 8.1 136% 150% 6.9 6.8 0.0 0% FY11 FY12 FY13 FY14 FY15 1H16 FY11 FY12 FY13 FY14 FY15 1H16 Liquid assets composition (%) 13% 33% 11% 10% 11% Cash Due from other financial institutions NZ Government Securities 17% NZ Local securities Supranational securities NZ Corporate & Bank securities RMBS Commentary High quality, diversified portfolio of RBNZ repo eligible liquid assets ➤ The core liquid asset portfolio has remained relatively stable in recent years ➤Liquid asset coverage of short term wholesale maturities includes cover for June Covered Bond maturity (NZD2bn) Liquid assets provide 60 months coverage of offshore maturing debt PRIVATE & CONFIDENTIAL#24New Zealand Mortgage Portfolio#25Mortgage portfolio composition Portfolio origination mix (%) New Zealand mortgage portfolio (%) 25| 11 28 60 60 Branch & Digital ■Broker ■Mobile Mortgage Managers Investor vs owner occupied (%) of new flows 100 ■Investor² 30 36 36 75 50 50 25 70 0 FY14 64 64 FY15 FY16 - YTD 5 18 77 Fixed ■Floating Other 1 Mortgage portfolio LVR distribution (%)³ 4 100 11 75 2 Owner occupied 50 50 25 T T 1 6 Greater than 90% Between 80 - 90% 93 85 Less than 80% 0 Total Portfolio FY16 YTD flows 1.'Other' includes revolving credit loans (variable rate loans that allow the borrower to withdraw funds up to a limit) and capped loans (fixed interest rate for 1 year, changing to a floating rate if it drops below the fixed rate). 2. 'Investor' lending provided for the purchase of, and/or secured by, residential investment property. Residential investment property is property that is not owner-occupied, or for the owners' exclusive use (such as a holiday house). 'Owner Occupied' includes all other residentially secured lending not classified as an Investment Property Lending. 3. LVR based on balance and assessment of property value at origination PRIVATE & CONFIDENTIAL#26Mortgage portfolio composition Mortgage portfolio – Original loan amount (%) Mortgage portfolio - LVR profile (%) 50 40 Average LVR 63% 40 50 30 10 Average loan $237k 10 3220 26 | 44 20 34 24 10 23 23 18 11 2 2 4 4 10 $0 - $150k $150k - $250k - $500k - 0<=60 60<=70 70<=80 80<=90 90<95 95+ $250k $500k $750k $750k $1m $1m+ Mortgage portfolio – Regional profile (%) Mortgage portfolio – Seasoning profile (%) Auckland Wellington 30 30 39 44 Christchurch 8 9 Other 6 10 14 24 Less than 1 year ■1 to 2 years 2 to 3 years ■3 to 4 years 17 4 to 5 years ■5+ years PRIVATE & CONFIDENTIAL#2724 27 | 0.80% 0.60% 0.40% 0.20% 0.00% Sep-08 Active mortgage customers 183k 2.00% Total Mortgage Portfolio $43.3bn 1.50% Market share 20.05% 1.00% YTD mortgage growth rate annualised 6.3% 0.50% Portfolio 80% LVR 14.8% 0.00% Average loan size $237k Average LVR 63% Mortgage portfolio delinquencies remain low Key statistics - as at 31 March 2016 Mortgage portfolio 30+ and 90+ delinquencies (%) 90+ dpd 30+ dpd Mortgage portfolio loss rates (%) 1.00% Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 0.02% % 30 plus dpd or Written Off Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mortgages 30+ delinquencies and written off (%, yearly averages) 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 Age Of Account 2006 2011 2007 -2012 2008 2009 2010 2013 2014 2015 PRIVATE & CONFIDENTIAL Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 -- Mar-15 Sep-15 Mar-16#2828 | RBNZ speed limits remain in place NZ regional house prices (2007 peak = 100) Index 100 at peak Auckland Canterbury Wellington Other North Island 180 Other South Island 180 160 140 160 140 Index 100 at peak RBNZ LVR speed limit >80% LVR flows (%, system before exemptions excluded) 40.0% 30.0% 20.0% RBNZ LVR restrictions remain in place - - - Investors in the Auckland Council area require a deposit of at least 30% Loans to owner-occupiers in Auckland >80% LVR limited to 10% Loans >80% LVR outside of Auckland limited to 15% 100 120 120 10.0% 100 80 80 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: REINZ, Westpac Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 PRIVATE & CONFIDENTIAL 10%#29Covered Bond Programme#3030 30 | WNZL Covered Bond Programme - Overview Issuer Group Guarantor Group Guarantor Rating Format Covered Bond Rating Programme Size Maturity Options Covered Bond Guarantor Covered Bond Guarantee LVR Cap in Asset Coverage Test Asset Percentage Collateral Programme Listing Covered Bond Guarantor Governing Law Westpac Securities NZ Limited, London Branch Westpac New Zealand Limited AA-/Aa3/AA- by S&P / Moody's / Fitch Legislative Covered Bond Aaa/AAA by Moody's / Fitch €5 billion Soft and Hard Bullet Westpac NZ Covered Bond Limited, a special purpose vehicle (SPV) Covered Bond Guarantor has guaranteed payments of interest and principal under the Covered Bonds secured over the Mortgage Loans and its other assets (Limited in recourse to its assets) 75% Subject to rating agency requirements, Programme maximum 90% New Zealand prime, first ranking residential mortgages London Stock Exchange New Zealand PRIVATE & CONFIDENTIAL#3131 | Covered Bond Pool - Overview Covered Bond Pool eligibility criteria • • • • First ranking mortgage registered under the New Zealand Real Property Legislation All loans are secured by a mortgage over land and a completed residential dwelling All residential mortgages are denominated and payable in New Zealand dollars Loans are originated by WNZL in the ordinary course of its business, subject to standard loan offer terms and conditions Outstanding Principal Balance owed by the borrower is not more than NZD1.5 million • Borrower is a New Zealand resident Total Pool Loan Balance¹ Number of Loans Cover Pool Loan Statistics as at 3 May 2016 NZ$7,309,700,310 51,099 NZ$143,050 NZ$1,500,000 58.41% Average Loan Size Max Loan Size Weighted Average Current LVR WA LVR (Indexed) 90 day + Arrears 49.85% 0.00% Weighted Average Seasoning 39 months • . Loans become amortising loans after any "interest only" period Loans are not governed or regulated by any rural, primary production, moratorium or mediation legislation other than Credit Contracts Act 1981 (NZ) or the Credit Contracts and Consumer Finance Act 2003 (NZ) . Loans required to be repaid within 30 years of sale . Loans are not delinquent more than 30 days or in default Weighted Average Remaining Term to Maturity Max Remaining Term to Maturity Weighted Average Interest Rate Fixed/Floating Split Interest Only 278 months 30 years 5.34% 86% / 14% 16% 1 Pool loan balance excludes cash balances. PRIVATE & CONFIDENTIAL#3232 | WNZL Covered Bond - Structural overview Westpac New Zealand Westpac NZ Covered Bond 8 Limited (WNZL) Limited (CBG) Seller, Group Guarantor, & Interest Rate Swap Provider 2 Covered Bond Guarantor 7 3 Westpac Securities NZ Limited (WSNZL) Issuer 6 5 Covered Bond Investors 8 Westpac Banking Corporation (WBC) Covered Bond Swap Provider Key 1. Loans sold by WNZL to CBG 2. CBG pays WNZL, funded via Intercompany Loan from WNZL 3. WNZL issues guarantee to Bond Investors 4. CBG issues guarantee to Bond Investors 5. WSNZL (London branch) issues Covered Bonds to Bond Investors 6. Bond Investors pay WSNZL for Covered Bonds 7. WSNZL on-lends proceeds to WNZL 8. WNZL is the Interest Rate Swap Provider and WBC is the Covered Bond Swap Provider to CBG PRIVATE & CONFIDENTIAL#3333 | WNZL Covered Bond - Programme highlights Structure Security Covered Bonds are issued by Westpac Securities NZ Limited, and guaranteed by WNZL (AA-/Aa3/AA-), backed by an unconditional and irrevocable guarantee by the Covered Bond Guarantor (Westpac NZ Covered Bond Limited), which is limited in recourse to its assets Security comprises a high quality pool of first ranking, prime New Zealand residential mortgages which meet the eligibility criteria (the cover pool). Mortgages in the cover pool are sold to the Covered Bond Guarantor to ensure that covered bondholders have a priority claim over the cover pool in the event of issuer insolvency Overcollateralisation Asset Monitor Prior to service of a Notice to Pay on the Covered Bond Guarantor, an Asset Coverage Test is run monthly to ensure the Covered Bond Guarantor has sufficient assets to support the outstanding covered bonds, plus a level of overcollateralisation set by the ratings agencies. The Asset Percentage requirement is confirmed by the rating agencies quarterly and is subject to a maximum of 90%, which represents a minimum level of overcollateralisation of 11%. Following service of a Notice to Pay on the Covered Bond Guarantor, an Amortisation Test is run monthly to ensure the Covered Bond Guarantor has sufficient assets to meet the covered bond obligations PricewaterhouseCoopers has been appointed to monitor the calculation of the Asset Coverage Test and the Amortisation Test on at least an annual basis Hedging The Interest Rate Swaps and Covered Bond Swaps are used to hedge any exposure of the Covered Bond Guarantor to interest rate and currency risks Regulatory Support The RBNZ permits Covered Bonds as repo eligible instruments. Covered Bond legislation passed in December 2013. The RBNZ has set an initial limit of 10% of total assets of an issuing bank (calculated by reference to the value of assets encumbered for the benefit of covered bond holders) PRIVATE & CONFIDENTIAL#34Appendix W#3535 | New Zealand Economy - population distribution Region Northland Population Kaitaia Kaikohe 151,689 Northern WHANGAREI Dargaville Auckland 1,415,689 (53% of population) Warkworth Orewa Helensville AUCKLAND Waikato 403,639 Pukekohe Bay of Plenty 267,741 Gisborne 46,653 Central North Shore Papatoetoe Manurewa Papakura HAMILTON Thames TAURANGA Whakatane Tokoroa ROTORUA Te Kuiti Taumarunut Taupo NEW PLYMOUTH Hawke's Bay 151,179 (24% of population) Taranaki 109,608 Manawatu-Wanganui 222,689 Motueka Wellington 471,315 Westport Hawera WANGANUI PALMERSTON NORTH Levin Paraparaumu Masterton Porirua Upper Hutt Richmond NELSON Lower Hutt WELLINGTON Blenheim Gisborne Wairoa NAPIER HASTINGS Feilding Dannevirke Tasman 47,157 Greymouth, Hokitika Nelson 46,437 South Rangiora CHRISTCHURCH Marlborough Ashburton 43,416 (23% of population).bru West Coast 32,148 Canterbury Waimate Queenstown Oamaru Alexandra Te Anau 539,433 CHATHAM ISLANDS Gore "DUNEDIN Otago 202,470 Balclutha INVERCARGILL Southland 93,339 Total Source: Statistics NZ, 2013 Census 4,244,602 PRIVATE & CONFIDENTIAL#3636 | Enhancing our position in New Zealand Airpoints opportunity Welcome Aboard A Significant opportunity to expand affluent customer base 1ppt lift in market share to 24%¹ > 60,000 new credit card accounts to 31 Jan 2016, nearly 40% new to bank . Material rise in card applications initiated a move to - Online fulfilment Online activation Launched market-first Airpoints debit card Over 16,000 debit cards issued in 5 months NZ Government banker Retained banking relationship with the New Zealand Government and its 36 agencies Eight year contract Provides scale to deliver significant enhancements - - - Process engineering to automate payments/reconciliations New digital interfaces supporting self- serve and improved debt collection (ie. student loans) Mobile payment tools NZ Government is a substantial part of the New Zealand economy, making up around 20% of the total transactions in the New Zealand market • Re-positioned brand It's time. Enhancing Westpac NZ's brand is a significant opportunity Research indicated - - Brand lacked meaning and consistency Now leveraging brand strengths ("trust", "astute" and "strong") New brand proposition ("It's time") designed to build on brand strengths Staff engagement and participation has been a focus of the launch 1 RBNZ.as at 31 January 2016. • Early results positive PRIVATE & CONFIDENTIAL#3737 | Reshaping our network Westpac One CANSTAR Best Online Banking New Zealand Westpac One®. It's easier, faster, smarter online banking. . • . Market leading platform. 2015 Canstar Best Online Bank in New Zealand1 67% of customer access via mobile devices Since launch - 34% of all applications are online² 7% increase in digital customers to 705k3 Active digital customers now 53%4 Optimising points of presence • Smaller/fewer branches Branch Digital • Flexible layout • Digitally enabled • 24/7 self-service • Staff move from transactions to service/support e Westpac Changing how customers bank We do night shifts too. • Further enhancing 24/7 capability • Largest NZ fleet of Smart ATM's with 161, in two thirds of branches Half of branches have 24/7 banking lobbies² Teller deposits fallen by 11% over the year % of deposits through Smart ATM's 33% 28% 34% Up 4ppts 37% ATM 2H14 1H15 2H15 1Q16 Video chat Hang up Rolling out next-generation ATMs • Increased security • Higher withdrawal limits • Cash recycling Pauline Smith • Cash cheques Contact Centre • Third party payments (Council 1 Canstar April 2015. 2 Excludes Airpoint applications. 3 As at 30 September 2015. 4 As at 31 January 2016. rates/utilities) PRIVATE & CONFIDENTIAL#3838 | Position relative to peers¹ Cash earnings ($m) Lending ($bn) FY14 FY15 1,215 1,177 ■FY14 FY15 104.8 96.6 916 864 69.0 846 776 807 823 64.6 65.6 68.2 64.4 60.8 Return on average assets (%) 1.20 1.17 1.20 1.20 Westpac NZ Peer 1 Peer 2 Peer 3 Westpac NZ Peer 1 Peer 2 Peer 3 Westpac NZ Peer 1 Peer 2 Peer 3 Deposit to loan ratio (%) 75.2 62.7 71.3 66.7 Westpac NZ Peer 1 Peer 2 Peer 3 Common equity Tier 1 capital ratio² (%) 11.1 IAPs to impaired assets³,4 (%) 10.7 41.8 40.1 10.5 Westpac NZ Peer 1 8.8 Peer 2 Peer 3 14.8 39.5 Westpac NZ Peer 1 Peer 2 Peer 3 1 Unless otherwise stated the financial results are as reported for the New Zealand operations in the Full Year 2015 Financial Results of each bank. Peer 2's financial year end is 30 June 2015. 2 Based on NZ legal entity 2015 Full Year Disclosure Statements. Peer 1 and 3 as at 30 September 2015, Peer 2 as at 30 June 2015. 3 IAP is individually assessed provisions. 4 Geography Disclosures, Peer 1 and 2 as at 30 September 2015, Peer 2 as at 30 June 2015. PRIVATE & CONFIDENTIAL#3939 | New Zealand regulatory changes Summary of key regulatory changes New Zealand Covered Bond legislation • RBNZ (Covered Bonds) Amendment Act 2013 . • • RBNZ LVR restrictions • October 2013 - Limit 10% >80% LVR . June 2015 Outside Auckland - Limit 15% >80% LVR RBNZ Investor Housing Loans · · Limit 5% >70% LVR on Investor Housing Loans in Auckland Higher RWA for Capital purposes on non-Owner Occupied to be introduced later in 2015 APRA LCR regulations January 2015 100% Liquidity Coverage Ratio for 1 month maturities. Term Deposits must honour contractual Term, or 30 days notice for economic break • . . Legislation passed December 2013 • RBNZ (Covered Bonds) Amendment Act 2013 Programme must be registered with RBNZ • WNZL first New Zealand bank registered - April 2014 Non compliance, RBNZ can compel issuer to take immediate corrective action Cover Pool (SPV) is not an associated, related or subsidiary company under Statutory Management regime . Cover Pool Monitor Independent Auditor (PwC) • Verify all calculations Moment in time observation PRIVATE & CONFIDENTIAL#4040 | Contact us For further information Jim Reardon Treasurer Westpac New Zealand Limited +64 9 367 3539 [email protected] Sophie Johnston Westpac Securities NZ Limited +44 20 7621 7540 [email protected] Home > About Westpac > Investor Centre > Fixed income investors Investor Centre > Manage your shareholding Fixed income investors Useful links, forms and information 3.4 on managing your shares. 05 F15 Est. 16.02 15.13 Range 14.00+ > Dividend information Dividend history, payment policies, dividend reinvestment and dividend donation plans > Westpac share information Share registries, American depositary receipts, employee shares and share register profile > Other Westpac securities Information on Westpac's ASX listed retail hybrids, preference shares, capital notes and subordinated notes Chg 04 14 01 15 207 Range .59 .77 +0 Our strategy for stable and efficiently priced wholesale funding is twofold: build a strong and diverse funding profile and broaden the investor base, while applying prudent liquidity oversight. Unsecured funding Debt programs for Westpac Banking Corporation (WBC), WBC (previously of St. George), Westpac Securities NZ Limited (WSNZL) and Westpac New Zealand Limited (WNZL). > Unsecured funding Secured funding Details of our covered bond programs for WBC and WSNZL and outstanding securitisation issuance. > Secured funding Login to Link's Investor Centre Print Link Market Services manages Westpac's share registry. Manage your shares > Contact our share registry Link Email: [email protected] Phone: +61 1800 804 255 View contact details > WNZL and WSNZL Funding and Securitisation Programmes WNZL Disclosure Statement WSNZL Financial Statements Please visit our investor website: http://www.westpac.com.au/about-westpac/ investor-centre/fixed-income-investors/ Click on "Westpac New Zealand" or "Westpac Securities NZ Limited" > Financial information Results announcements, Annual reports, Regulatory disclosures, US reporting, and financial summaries > Westpac at a glance A guide for new investors, company profile and history, board of directors and executive team > Events and presentations History of Westpac's presentations and investor updates, full year results and AGMs. > Fixed income investors Funding programs, securitisation and covered bond reporting, presentations and credit ratings > Unsecured funding > Secured funding > Credit ratings > Fixed in presentations Global funding contacts > Westpac Securities NZ Limited Credit ratings Details of Fitch, Moody's and Standard & Poor's short and long term ratings for Westpac Banking Corporation and Westpac New Zealand Ltd. > Credit ratings Westpac Securities NZ Limited A dedicated entity providing offshore wholesale funding for West New Zealand Limited. Includes key facts, financial statements, credit ratings for WNZL and other information > Westpac Securities NZ Limited Fixed income presentations Presentations for fixed income investors from Westpac and Westpac New Zealand Ltd (in PDF). > Fixed income presentations Global funding contacts Find names, emails and phone numbers for our global funding contacts in Sydney, London, New York, Hong Kong and New Zealand. > Global funding contacts Westpac financial calendar Shareholder information, important dates and announcements. View calendar > Get the latest > ASX announcements. share prices PRIVATE & CONFIDENTIAL