Bill Evans CFO Network presentation March 2012

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Bill Evans CFO Network presentation March 2012

  1. 1. CFO NetworkMarch 2012Bill Evans.
  2. 2. LTRO has improved sentiment at short end... bps 2yr government bond spread to bunds bps24000 800 Greece Spain Portugal Italy18000 Ireland 60012000 4006000 Sources: Bloomberg, 200 Westpac Economics 0 0 Jan-09 Jan-11 Jan-09 Jan-11 2
  3. 3. ... less so for longer maturities bps 10yr government bond spread to bunds bps4000 800 Greece Spain Portugal Italy3000 Ireland 6002000 400 Sources: Bloomberg, Westpac Economics1000 200 0 0 Jan-09 Jan-11 Jan-09 Jan-11 3
  4. 4. 2012 monthly required issuance by country €bn €bn160 160 Portugal Spain Italy Source: Goldman Sachs140 France Germany 140120 120100 10080 8060 6040 4020 20 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 4
  5. 5. Net public debt: G7 chalk, Australian cheese %GDP %GDP100 100 Sources: Westpac, IMF, Australian Treasury. 90 90 80 1990 2000 80 70 70 60 2009 2015 60 50 50 40 40 30 30 20 20 10 10 0 0 US UK Germany France Canada Australia 5
  6. 6. Federal budget: underlying cash balance % of GDP $bn4 40 Gov’t MYEFO fcsts to ’14/15 $bn (rhs) % of GDP (lhs)2 200 0-2 -20 -3.3-4 -4.1 -4.2 -40 Sources: Treasury, ABS, Westpac Economics-6 -60 1980/81 1990/91 2000/01 2010/11 6
  7. 7. AU-US 10yr Bond Spread vs AU 10yr Yield bp %300 7.0 Source: Bloomberg, Westpac 6.5250 6.0200 5.5150 5.0 4.5100 4.0 50 AU-US 10yr Bond Spread (lhs) 3.5 AU 10yr Bond Yield (rhs) 0 3.0 May-02 May-04 May-06 May-08 May-10 7
  8. 8. CGS Supply & Ownership A$bn A$bn250 250 Thousands Source: RBA, Westpac200 Total CGS On Issue 200 Resident Holdings150 Non-Resident Holdings 150100 10050 50 0 0 1986 1989 1992 1995 1998 2001 2004 2007 2010 8
  9. 9. Public and private debt ppt ppt of GDP change (2000–2010) ppt70 70 Household Non-financial corporate Government60 6050 Source: BIS 5040 4030 3020 2010 10 0 0 US Australia 9
  10. 10. Household debt % % of GDP; 2010 %125 125 Source: BIS100 10075 7550 5025 25 0 0 US Spain Italy France Germany Australia 10
  11. 11. Credit mix: annual growth % ann % ann35 3530 Total Housing Business 3025 2520 2015 1510 10 5 5 0 0 -5 -5 Sources: RBA, Westpac Economics-10 -10 Nov-77 Nov-83 Nov-89 Nov-95 Nov-01 Nov-07 11
  12. 12. Westpac RMBS Average Trading Margin bps160140 Sources: Westpac1201008060 Trading Margin4020 0 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 12
  13. 13. RMBS Issuance 2004-2011 $A bn $A bn70 70 Sources: Westpac, Insto, S&P, Bloomberg60 6050 50 Domestic Offshore40 4030 3020 2010 10 0 0 2004 2005 2006 2007 2008 2009 2010 2011 13
  14. 14. CMBS Issuance 2004-2011 $A bn $A bn5 5 Sources: Westpac, Insto, S&P, Bloomberg4 4 Domestic Offshore3 32 21 10 0 2004 2005 2006 2007 2008 2009 2010 2011 14
  15. 15. Bank funding composition %100 15 11 offshore 13 17908070 27 39 wholesale - long term60 wholesale - short term50 customer deposits4030 5620 4610 Source: Westpac 0 2008 2011 15
  16. 16. 3-5 yr physical bonds widening bps250 Big 4 Average Senior Spread200150100 Sources: Bloomberg,Westpac50 0 Jan-06 Jun-07 Nov-08 Mar-10 Aug-11 16
  17. 17. Bank bill vs term deposit rates % %10 10 180 day bank bill rate9 Banks average special term deposit rate* 98 *average across all terms 87 76 65 54 43 Sources: RBA, Westpac 32 2Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 17
  18. 18. Mortgage rate spread to official cash rate bps bps350 350300 300 +134bps250 250200 200150 150100 100 50 *spread between average bank standard 50 Sources: RBA, Westpac Economics variable mortgage rate and official cash rate 0 0 Feb-98 Feb-00 Feb-02 Feb-04 Feb-06 Feb-08 Feb-10 Feb-12 18
  19. 19. Disclaimer DisclaimerWestpac Institutional Bank is a division of Westpac Banking Corporation ABN 33 007 457 141. Informationcurrent as at date above. This information has been prepared without taking account of your objectives, financialsituation or needs. Because of this you should, before acting on this information, consider its appropriateness,having regard to your objectives, financial situation or needs. Westpac’s financial services guide can be obtainedby calling 132 032, visiting www.westpac.com.au or visiting any Westpac Branch. The information may containmaterial provided directly by third parties, and while such material is published with permission, Westpac acceptsno responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpacintends by this notice to exclude liability for the information. The information is subject to change without noticeand Westpac is under no obligation to update the information or correct any inaccuracy which may becomeapparent at a later date. Westpac Banking Corporation is registered in England as a branch (branch numberBR000106) and is authorised and regulated by The Financial Services Authority. Westpac Europe Limited is acompany registered in England (number 05660023) and is authorised and regulated by The Financial ServicesAuthority. Westpac operates in the United States of America as a federally chartered branch, regulated by theOffice of the Controller of the Currency and is not affiliated with either: (i) a broker dealer registered with the USSecurities Exchange Commission; or (ii) a Futures Commission Merchant registered with the US CommodityFutures Trading Commission. If you wish to be removed from our e-mail, fax or mailing list please send an e-mailto economics@westpac.com.au or fax us on +61 2 8254 6934 or write to Westpac Economics at Level 2, 275Kent Street, Sydney NSW 2000. Please state your full name, telephone/fax number and company details on allcorrespondence. © 2012 Westpac Banking Corporation. Past performance is not a reliable indicator of futureperformance. The forecasts given in this document are predictive in character. Whilst every effort has been takento ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affectedby incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differsubstantially from these forecasts.

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