Westpac Internet -Financial glossary

Financial glossary

View a financial glossary of the key terms used in our results announcements.

Dividends

Earnings

Shareholder Value

Productivity and Efficiency

Business Performance

Capital Adequacy

Asset Quality

Other

Dividends

Ex dividend date
The first day of trading when shares trade without the entitlement to the dividend. To be entitled to a dividend a shareholder must have purchased shares before the ex dividend date. Shares are quoted ex-dividend four business days before the Record date.

Record date
The date on which Westpac's register of Shareholders is closed in order to determine entitlement to a dividend.

Earnings

Cash earnings ($m)
Net profit attributable to equity holders adjusted for the impact of Treasury shares, New Zealand Class share distributions (in 2005 only), fair value changes on economic hedges of hybrid equity instruments, and one-off significant items not part of ongoing business operations.

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Shareholder Value

Earnings per ordinary share (cents)
Net profit attributable to equity holders adjusted for dividends paid on New Zealand Class shares (2005 only) divided by the weighted average ordinary shares (statutory basis). Earnings are adjusted in 2055 for New Zealand Class shares dividends because, under A-IFRS, these are included in net profit attributable to outside equity interests.

Weighted average ordinary shares (underlying)
Weighted average number of fully paid ordinary shares listed on the ASX for the relevant period.

Weighted average ordinary shares (statutory)
Weighted average number of fully paid ordinary shares listed on the ASX for the relevant period less Westpac shares held by the Group ('Treasury shares').

Cash earnings per ordinary share (cents)
Cash earnings divided by the weighted average ordinary shares (underlying basis).

Fully franked dividends per ordinary share (cents)
Dividend paid out of income which carries a credit for Australian company income tax paid by Westpac.

Dividend payout ratio (%)
Ordinary dividend per share divided by net profit per share attributable to the equity holders of WBC.

Return on equity (%)
Net profit attributable to equity holders adjusted for dividends paid on New Zealand Class shares (2005 only) divided by the average adjusted ordinary equity.

Cash return on equity (%)
Cash earnings divided by the average ordinary equity.

Economic profit ($m)
Cash earning less a capital charge calculated at 10.5% of average ordinary equity plus 70% of the estimated value of franking credits paid to shareholders.

Average ordinary equity ($m)
Average total equity less average outside equity interests and average hybrid equity.

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Productivity and Efficiency

Operating expenses ($m)
Operating expenses do not include impairment losses on loans.

Expense to income ratio (%)
Operating expenses divided by net operating income.

Total banking group expense to income ratio (%)
Total banking operating expenses divided by total banking operating revenue. Total banking business includes Business and Consumer Banking, Institutional Bank, New Zealand banking operations, Pacific Bank and the Group Business Unit.

Full time equivalent staff (FTE)
A calculation based on the number of hours worked by full and part time employees as part of their normal duties. For example, the full time equivalent of 1 FTE is 76 hours paid work per fortnight.

Business Performance

Net interest spread (%)
The difference between the average yield on all interest bearing assets and the average rate paid on interest bearing liabilities.

Net interest margin (%)
The net interest spread plus the benefit of net non-interest bearing liabilities and equity.

Average interest earning assets ($m)
The average balance of assets held by the Group that generate interest income. Where possible, daily balances are used to calculate the average balance for the period.

Average interest bearing liabilities ($m)
The average balance of liabilities owed by the Group that incur an interest expense. Where possible, daily balances are used to calculate the average balance for the period.

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Capital Adequacy

Net capital ratio (%)
Tier 1 capital ratio plus Tier 2 capital ratio less deductions.

Tier 1 capital ratio (%)
Total Tier 1 capital as defined by APRA divided by Risk Weighted Assets (RWA).

Adjusted Common Equity (ACE) ratio (%)
ACE is equal to shareholders funds less hybrid equity, intangible assets, investments in insurance, funds management and securitisation entities and any other Tier 1 deductions. This is divided by RWA.

Risk Weighted Assets (RWA) ($m)
Assets (both on and off-balance sheet) of the Bank are assigned within a certain category and amounts included in these categories are multiplied by a risk weighting. The resulting weighted values are added together to arrive at total risk weighted assets.

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Asset Quality

Individually assessed provisions
Provisions raised for losses that have already been incurred on loans that are known to be impaired and are individually significant. The estimated losses on these impaired loans will be based on expected future cash flows discounted to their present value and as this discount unwinds, interest will be recognised in the statement of financial performance.

Collectively assessed provisions
Loans not found to be individually impaired or significant will be collectively assessed in pools of similar assets with similar risk characteristics. The size of the provision is an estimate of the losses already incurred and will be estimated on the basis of historical loss experience for assets with credit characteristics similar to those in the collective pool. The historical loss experience will be adjusted based on current observable data.

Impaired assets
Impaired assets, as defined by APRA can be classified into the following categories:

Non-accrual assets: Loans with individually assessed impairment provisions held against them, excluding restructured loans.

Restructured assets: assets where the original contractual terms have been formally modified to provide concessions of interest or principal for reasons related to the financial difficulties of the customer.

90 days past due: consumer exposures where contractual payments are 90 days or more in arrears and not well secured.

90 days past due - well secured
A loan facility where payments of interest or principal are 90 or more days past due and the value of the security is sufficient to cover the repayment of all principal, interest amounts due and an additional six months interest.

Other

Customer Satisfaction
Refers to the proportion of people for whom Westpac is their main financial institution who rate their overall relationship with Westpac as Very or Fairly Satisfied.

Employee Morale
Refers to an index (between 0 and 10) relating to employee surveys. The closer the number is to ten, the greater the number of positive responses received.

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Dividend details

Find out more about our dividend payment options and view our dividend history.

Dividends

Ex dividend date	The first day of trading when shares trade without the entitlement to the dividend. To be entitled to a dividend a shareholder must have purchased shares before the ex dividend date. Shares are quoted ex-dividend four business days before the Record date.

Record date	The date on which Westpac's register of Shareholders is closed in order to determine entitlement to a dividend.


Earnings

Cash earnings ($m)	Net profit attributable to equity holders adjusted for the impact of Treasury shares, New Zealand Class share distributions (in 2005 only), fair value changes on economic hedges of hybrid equity instruments, and one-off significant items not part of ongoing business operations.

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Shareholder Value

Earnings per ordinary share (cents)	Net profit attributable to equity holders adjusted for dividends paid on New Zealand Class shares (2005 only) divided by the weighted average ordinary shares (statutory basis). Earnings are adjusted in 2055 for New Zealand Class shares dividends because, under A-IFRS, these are included in net profit attributable to outside equity interests.

Weighted average ordinary shares (underlying)	Weighted average number of fully paid ordinary shares listed on the ASX for the relevant period.

Weighted average ordinary shares (statutory)	Weighted average number of fully paid ordinary shares listed on the ASX for the relevant period less Westpac shares held by the Group ('Treasury shares').

Cash earnings per ordinary share (cents)	Cash earnings divided by the weighted average ordinary shares (underlying basis).

Fully franked dividends per ordinary share (cents)	Dividend paid out of income which carries a credit for Australian company income tax paid by Westpac.

Dividend payout ratio (%)	Ordinary dividend per share divided by net profit per share attributable to the equity holders of WBC.

Return on equity (%)	Net profit attributable to equity holders adjusted for dividends paid on New Zealand Class shares (2005 only) divided by the average adjusted ordinary equity.

Cash return on equity (%)	Cash earnings divided by the average ordinary equity.

Economic profit ($m)	Cash earning less a capital charge calculated at 10.5% of average ordinary equity plus 70% of the estimated value of franking credits paid to shareholders.

Average ordinary equity ($m)	Average total equity less average outside equity interests and average hybrid equity.

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Productivity and Efficiency

Operating expenses ($m)	Operating expenses do not include impairment losses on loans.

Expense to income ratio (%)	Operating expenses divided by net operating income.

Total banking group expense to income ratio (%)	Total banking operating expenses divided by total banking operating revenue. Total banking business includes Business and Consumer Banking, Institutional Bank, New Zealand banking operations, Pacific Bank and the Group Business Unit.

Full time equivalent staff (FTE)	A calculation based on the number of hours worked by full and part time employees as part of their normal duties. For example, the full time equivalent of 1 FTE is 76 hours paid work per fortnight.


Business Performance

Net interest spread (%)	The difference between the average yield on all interest bearing assets and the average rate paid on interest bearing liabilities.

Net interest margin (%)	The net interest spread plus the benefit of net non-interest bearing liabilities and equity.

Average interest earning assets ($m)	The average balance of assets held by the Group that generate interest income. Where possible, daily balances are used to calculate the average balance for the period.

Average interest bearing liabilities ($m)	The average balance of liabilities owed by the Group that incur an interest expense. Where possible, daily balances are used to calculate the average balance for the period.

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Capital Adequacy

Net capital ratio (%)	Tier 1 capital ratio plus Tier 2 capital ratio less deductions.

Tier 1 capital ratio (%)	Total Tier 1 capital as defined by APRA divided by Risk Weighted Assets (RWA).

Adjusted Common Equity (ACE) ratio (%)	ACE is equal to shareholders funds less hybrid equity, intangible assets, investments in insurance, funds management and securitisation entities and any other Tier 1 deductions. This is divided by RWA.

Risk Weighted Assets (RWA) ($m)	Assets (both on and off-balance sheet) of the Bank are assigned within a certain category and amounts included in these categories are multiplied by a risk weighting. The resulting weighted values are added together to arrive at total risk weighted assets.

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Asset Quality

Individually assessed provisions	Provisions raised for losses that have already been incurred on loans that are known to be impaired and are individually significant. The estimated losses on these impaired loans will be based on expected future cash flows discounted to their present value and as this discount unwinds, interest will be recognised in the statement of financial performance.

Collectively assessed provisions	Loans not found to be individually impaired or significant will be collectively assessed in pools of similar assets with similar risk characteristics. The size of the provision is an estimate of the losses already incurred and will be estimated on the basis of historical loss experience for assets with credit characteristics similar to those in the collective pool. The historical loss experience will be adjusted based on current observable data.

Impaired assets	Impaired assets, as defined by APRA can be classified into the following categories: Non-accrual assets: Loans with individually assessed impairment provisions held against them, excluding restructured loans. Restructured assets: assets where the original contractual terms have been formally modified to provide concessions of interest or principal for reasons related to the financial difficulties of the customer. 90 days past due: consumer exposures where contractual payments are 90 days or more in arrears and not well secured.

90 days past due - well secured	A loan facility where payments of interest or principal are 90 or more days past due and the value of the security is sufficient to cover the repayment of all principal, interest amounts due and an additional six months interest.


Other

Customer Satisfaction	Refers to the proportion of people for whom Westpac is their main financial institution who rate their overall relationship with Westpac as Very or Fairly Satisfied.

Employee Morale	Refers to an index (between 0 and 10) relating to employee surveys. The closer the number is to ten, the greater the number of positive responses received.

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