Westpac ‘ahead of plan’ on recovery

An asset-sale program delivering results much faster than expected shows Westpac is ‘way ahead of plan’, according to chairman John McFarlane.

Chairman of Westpac John McFarlane, above, says the bank is in a good position with its franchises and customer base, and its capital position is strong. Picture: Adam Yip

An asset-sale program that is delivering results much faster than expected meant that Westpac was “way ahead of plan” in its simplification project, according to chairman John McFarlane.

In an in-house video before Wednesday’s annual meeting, Mr McFarlane addressed the progress of Westpac’s “fix, simplify, perform” strategy, saying “fix” was broadly on plan and “simplify” was way ahead, with “perform” the real priority over the next couple of years.

The chairman said he had a “dead simple” message on the three-year turnaround plan.

“A, we’re going to get it right, and B, we’re going to get it done,” he said.

Mr McFarlane rejected scepticism that Westpac would achieve its much-trumpeted $8bn cost target by 2024, even though costs were higher last ­financial year.

He said they would be lower in 2022 and then achieve the ­target.

In the meantime, the bank was focused on rebasing its ­financial performance “to get shareholder value back up”.

Westpac, he said, was in a good position with its franchises and customer base, its capital position was strong, and considerable progress had been made in the turnaround.

Mr McFarlane was appointed chairman in April last year, replacing Lindsay Maxsted amid a board and management upheaval following the Austrac money-laundering debacle.

Then-chief executive Brian Hartzer fell on his sword soon after, with Peter King eventually succeeding him as full-time chief executive.

Westpac reached a settlement with Austrac in October last year involving the payment of a record $1.3bn penalty.

On climate change, with activists putting up shareholder resolutions at each of the three major-bank annual meetings this week, Mr McFarlane said there were a range of views.

“It’s a very difficult problem for financiers because you’ve got a range of opinions from people that don’t believe in climate change and feel that we should be expanding in natural areas where Australia has a mining advantage, to others who feel that we should stop everything today,” he said. “And of course neither of these is palatable for the country … because (we) have to transition.”

The right decision, he said, was to support the country and customers in the transition to net-zero carbon emissions by 2050 and to be “out of coal by 2030”.

Mr McFarlane said Australia’s responses to the pandemic was up with the best in the world, predicting that the country would learn to live with the virus.

“It’s been a fantastic outcome, (but) at a big sacrifice to debt levels and to the economy, which of course has recovered faster than we thought it was going to,” he said.