Westpac: One Of The Four Big Banks

Company Overview

Westpac is considered as one of the four “Big Banks” of Australia. It is the second largest bank by market capitalization and is the first bank founded in Australia in the year 1817. It offers a large portfolio of banking and financial services to its customers. Its vision is ‘To be one of the world’s great companies, helping our customers, communities and people to prosper and grow’. To achieve its vision it implements a customer-focussed and sustainable strategy. [1]

SWOT ANALYSIS

Strengths

• Asset quality of the bank has been growing with the lowering of the number of business loans that are impaired or under stress. Reduction in the customer 90+ day delinquencies in loans and mortgages has also contributed

This makes it mandatory for other banks as well to stay in the competition with attractive schemes. [4]

• The government has also laid down policies for acquisition of stake by a foreign company. The Financial Sector (Shareholding) Act 1998 states that the Treasurer must approve if the stake to be acquired is more than 15% for a financial sector company. The proposals for such an acquisition are subject to the foreign investment policy of the Australian government as per the Australian Foreign Acquisitions and Takeovers Act 1975. [4]

Economical

• The increase in business activity can be attributed to the rise in non-mining business environment, specifically services sector due to stronger household demand and resource exports. Low interest rates have increased demand for housing loans and new investment in dwelling. This allows for growth in deposits and investments.[4]

• Controlled inflation, moderate employment growth and lowered GDP would push the central bank to maintain its cash rate at 2.5% but it would gradually tighten the policy as the international markets improve with increase in Australia’s trade activities and firm domestic demand. [4]

The banks need to take them into consideration for making various lending or investment or other strategic decisions to promote long-term growth. Replacement of fossil fuels with renewable energy sources leads to a more sustainable economic model. The capital market can focus on these new opportunities as profitable ventures. Thus, as the banking operations may be affected by the environmental deterioration, accessing and understanding the adaptation risk for the organization, natural capital risk and its value, and reducing the environmental footprint are some of the action plans initiated at Westpac. Westpac has adopted an inclusive approach where it engages with all the stakeholders including its suppliers, customers, employees, the government and other interest groups to create a sustainable economy. To protect the environment, the bank introduced the green bond after partnering with the World Bank (suppliers). It lent $8 B to the environmental service sector (CleanTech - customer) for cleanliness. It works with building owners and improves resource efficiency while designing the local retail networks to reduce environmental impact. It aims at maintaining carbon neutrality, office paper use reduction, recycling and effective power use.