Management Accounting Report: Westpac Bank Performance Analysis

This report provides a comprehensive analysis of Westpac Bank's financial performance, organizational evaluation, and sustainability initiatives. It begins with an executive summary highlighting Westpac's position as a leading Australian banking institution and its commitment to sustainability. The report delves into Westpac's financial performance, including key metrics such as total cash profit, ROE, and revenue growth. It also examines the company's organizational structure, strategic objectives, and its approach to sustainability, including its efforts to promote employee well-being and community resilience. The report further illustrates Westpac's performance through various sustainability initiatives, financial aspects, and key performance indicators. It acknowledges the challenges faced by the bank, such as breaching lending obligations, and emphasizes the need for strict measures to improve banking performance and ensure responsible lending practices. Finally, the report justifies Westpac's performance by highlighting its corporate vision and its commitment to sustainable practices across social, environmental, and economic areas. This report is a valuable resource for understanding Westpac's financial health and strategic direction.

MANAGEMENT ACCOUNTING: WESTPAC
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EXECUTIVE SUMMARY
Westpac was the first banking institution in Australian that holds a unique position in
Australia. The company has been established in the year 1917 as a part of the Bank of NSW.
Westpac in Australia is the first and the oldest bank. Economical and commercial
performance is the most essential element of the Company. However, the organisation’s
success is dependent on providing effective service that helps to reduce cost and complicacy
associated with the disaster legacy centre.
The performance of Westpac can be defined by two major factors:
 Incorporating sustainability efforts within the business strategy to expand the
performance by promoting wellbeing within the organisation. However, Westpac has
admitted that they are responsible for breaching lending obligating while lending
home loans. For doing so, they have agreed to pay an amount of $35 million civil
penalty to mitigate the issue. It has been found that during the period of 2011 and
2015 the banking organisation has approved automated decision of almost 260,000
home loans.
 To protect the interest of the shareholders by complying with the corporate policies of
all the legal requirements within the organisation. Amongst these home loans, an
additional 50,000 loans were approved by the bank using an improper method while
accessing the consumer’s capability to the pay the home loan.
Considering the issues faced by Westpac it is evident that needs to take strict step to
mitigate this issue by improving their banking performance. The lenders as well needs to
verify the information for ensuring all the information and needs to evaluate the loan whether
it is suitable for the borrowers. Westpac needs to act responsibly while ensuring the chance to
repay the loans to the customers.
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I Introduction
Westpac has been identified as the leading banking organisation in the global list 100. It
has been ranked as one of the most sustainable business organisation in terms of performance
and sustainability globally reported by World Economy Forum 2015. In this context, the
banking organisation is engaged in offering banking and financial services to almost 13
million consumers.
The company employs nearly 36,000 people in Australia. Westpac has a total cash profit
of $7,822 million and ROE return of 14.0% (refer to appendix 1). The company has an
industry capitalisation of $95 billion with almost 615,000 shareholders (Westpac 2018).
Considering the financial performance of the organisational they maintain a high corporate
strategy. In this aspect the organisation’s strategy is to provide consistent yearly financial
production:
 Total profit for the equity holders with $2,818 till 11%
 Financial revenue of $2874 million till 12%
 Cash income for each share of 155.3 cents till 12%
 Cash revenue on the equity value of almost 20.7% with an economic production of
17%.
 The company has a strong capital position a 7.2% and ACE at 5.4%.
Therefore, the company’s major objective is to measure the performance of financial
transition for their Australian cooperating Bank. In this context, the report represents the
overall financial objective of the Westpac Company that can be achieved through effective
strategies of business and processes. Drawing from the objectives and mission of the
company the report illustrates the performance of Westpac using different metrics. Finally,
the report presents the definition of performance in accordance with Westpac.
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II Organisational Evaluation
Westpac’s organisational objective is to deliver on the vision of the organisation by
establishing deep and endurable customer relationship by sustaining the leadership within the
community and by offering huge returns for their stakeholders. In delivering their business
objective, the company is focused on the core markets of Australia as well as New Zealand
(Mahmoud et al. 2016). In these markets, the company provides a huge range of financial
offerings and services that support the financial requirements of the consumers.
By strengthening a strong position within the market the company has managed to
acquire more than 13 million consumers by focusing on organic expansion and increasing the
number of consumers. However, the company has achieved the leading position by
developing long-term value for its customer’s employees as well as shareholders within the
community. This organisational performance has been identified by their long-term interest
and confirmation that these terms are in consistency with the efficiency of the resources (Sani
& Maharani 2015).
Westpac has successfully implemented and adopted all the concepts if organisational,
management by measuring its environmental social as well as economic parameters that are
popularly called triple bottom-line report. West Bank Corporation has fulfilled all these
aspects of performance by integrating the concepts of sustainable business. The supply chains
of the company spend a huge amount for the indigenous Australian business with almost $1.2
million.
Apart from these, there are 67, 122 employees those who had taken part in the
Westpac group financial wellbeing program of education. Westpac has investment $1.32
billion for providing support for the need of community resilience and for the development of
affordable housing sector. By doing so, the organisational has helped to enhance the
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individuals work as well as lives by approaching society changes. Westpac is thinking
creatively by providing for the underemployed group of people and evolving them with
service offering.
In this context, Westpac has recognised the significant for implementing
accountability in business activities that are helpful for the organisation promoting social and
economic development for encouraging these activities, the senior’s managers of the
company has established a code of conduct for their business partner’s including staffs and
suppliers for reducing the severe impact on the environment (Van Dooren, Bouckaert &
Halligan 2015).
However, the company motivates it suppliers to put a priority on their
environmentally friendly products. These types of activities of organisational performance
allow the banking organisation to establish effective processes and services that does not
decline the quality of the organisation.
The organisational structure of Westpac consists of the strategic position including
Group executives of Westpac, retail and business rankings, the CEO of the organisation,
product managing for the Australian banking operation. The group of production managers
are responsible for maintaining the significant progress of the banking line and wealth front
line area by demonstrating cross-selling performance in the current years. The responsibility
of the CEO is to manage the product and development of risk management of the customer
requirements along with the online mobile operations.
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Figure 1: Management structure of Westpac
(Source: Westpac 2018)
III Illustrating Performance
The most important aspect of performance for Westpac is to move towards
sustainability across series of areas such as social, environmental, as well as financial
activities over the period of several years. Performance parameters of the organisation is
based on different sustainability initiatives taken by the organisation. It is evident from the
annual report for the period of almost 200 years Westpac has consistently adapted to build
effective support for their customers and development of economy.
It is quite clear from the report that the organisational has been operating in a
sustainable way that is deeply rooted in the business as well as culture. In this context, the
major shareholders of Westpac consist of consumers, employees, community members,
investors as well as suppliers (Dumay 2016).
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CEO
Production
Manager
Consumer
Bank
Executves
Retail Banking
Executives
Board Of
Directors

The organisation has been successfully embracing leadership worlds that held by
women reported an increase from 16 percent in the year 2015 to 48 percent in the year 2017.
In addition to this, the rate of employees working flexibly increased from 63 percent in 2014
to 74 percent in the year 2017. On the contrary, for the purpose of environment issues, the
organisation has raised $500 million through the Westpac climate bond. Along with it they
have increased a certain proportion of renewable energy finance from 45 percent to 59
percent in the entire generation of electricity. (Chuang & Hu 2015).
The performance and sustainability report of Westpac highlighted that the company
has successfully strengthened the balance sheet by carefully managing the margins and by
accomplishing $263million in terms of productivity thereby growing their investment in
terms and digital and service activities (Razak et al. 2017). On the contrary, the company
managed to increase their customer base by almost 3 percent and has gained strong home
loan with a deposit increase of 8 percent and 7 percent.
Financial performance of the organisation highlights that the company is on a steady
profitable progress along with broader economy and country. The financial aspects of the
company show that:
The net revenue of the company is high at 3% with a high growth with a net interest
income of $15,348 million (refer to appendix 1). Again the total percentage of lending
revenue increased to 8% with the rising in Australian mortgages of 8%. In this context, the
Australian business lending increased to3% with the growth of SME lending activities
(Westpac 2018).
The total interest margin was high at 5 points with 2.13% except for the treasury and
markets. During the second half, the 3 basis points dropped in the margin reflecting the effect
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of high cost of fund and declining interest rate. Moreover, the expenditure of income ratio
was about 42% with the expenses that is high at 3% I line with the growing revenue.
IV Justification of Performance
The company’s corporate vision is to create sustainable performance in series of areas
including social, environmental and economic performance over the period of 2016.
(Subramaniam et al. 2015). It was 15 years ago when Westpac set out its first sustainability
strategy by outlining the organisational operations on the responsibility of conducting
business. From the perspective of sustainable performance. The company has achieved
milestone target with 50% of women taking part in the leadership roles.
In addition to these, they have lent $500 million through the Westpac climate issue for
addressing the environmental services and approaches. By doing so, the organisation has
ensured that the workforce represents a wider community where the group operates (Dumay
2016). The company has always been in a momentum for building ways to enhance
sustainability challenges. In this context, it is the first bank to take part in the climatic issues
that are in line with the climate associated financial disclosures.
However, the organisational has faced issues related to performance. Westpac has
admitted that they are responsible for breaching lending obligations while offering home
loans to the customers. Based on this, obligation they have agreed to pay a penalty of $35
million to the court. It has been found that during the period of 2011 and 2015 the banking
organisation has approved automated decision of almost 260,000 home loans (Al-Musali &
Ku Ismail 2015).
The organisation has raised an amount of $500 million and has delivered the first star
rated bank branch for obtaining the highest rating. Along with it they expended their
renewable energy proportion from 45 percent to 50 percent in total generation of electricity
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for the purpose of suitable development of community environment. Therefore, it is evident
that Westpac is taking substantial steps to build sustainable performance to expand their
business as well as to establish the community (Walker et al. 2015).
Therefore, it can be said sustainability and performance go hand in hand for the
banking organisation that are consistently addressing the wellbeing of community and
economic performance. They have successfully managed outgrew the objective by
developing a decision-oriented culture that encourages sustainability in service. Considering
the ongoing performance and the issues faced by Westpac it is evident that needs to take strict
step to mitigate this issue by improving their banking performance. Westpac needs to act
responsibly while ensuring the chance to repay the loans to the customers
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Van Dooren, W., Bouckaert, G. & Halligan, J., 2015. Performance management in the
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Westpac (2018). Home: Westpac Banking Corporation. Available at:
https://www.westpac.com.au [Accessed 10/08/18]
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Appendix
Appendix 1: Annual profit of Westpac Australia in 2016
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