Westpac Banking Corporation ($WBC)

Good morning, everyone. Good morning, and welcome to Westpac's UNITE Market Update. I'm Justin McCarthy, General Manager of Investor Relations. Before we commence, I acknowledge the traditional custodians of the land on which we meet today. For us in Kent Street here, that's the Gadigal people of the Eora Nation. I would like to pay my respects to elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people. Joining me today is Westpac's CEO, Anthony Miller; and Chief Transformation Officer, Peter Herbert. After the presentation, we'll have time for Q&A. And then we'll also -- for those people online, there's an opportunity to ask questions via the vevox you will have the instructions in your invitation. With that, over to you, Anthony.

Thank you. Good morning, and thanks for being here. It's been a year since I set out my priorities as CEO and our plan to deliver UNITE. Today, these priorities across customer, people, risk, transformation and performance are embedded across Westpac, and they underpin our ambition to be our customers' #1 bank and partner through life. UNITE is a cornerstone program of our transformation agenda, and we're well into its execution. The program is being delivered to benefit customers, our employees and shareholders. While it is designed to generate efficiencies in its own right, sustainable performance depends on disciplined execution and consistent delivery every day. Much of the work that's underway on UNITE is happening in the background as we prepare for larger scale migrations. From an external perspective, changes will be most visible this year across business and wealth. We recently completed the migration to deliver One Wealth platform and today announced we're moving to one commercial bank. These initiatives are helping to reshape and improve our operating model. UNITE is an important investment in Westpac's future, it will reset how Westpac operates across products, services, processes and systems through implementing One Best Way across the entire bank. This will further strengthen both our foundations and how we deliver for customers, our people and shareholders. As we've said before, while we have robust and capable technology assets, we have too many. Simplifying our technology and how we operate supports us in becoming a more efficient, resilient and customer-focused bank. For customers, this means delivering service excellence consistently, earning their trust to become their #1 bank. For our people, simpler processes allow more time to be spent with customers, supporting a more engaged workforce. And for our shareholders, UNITE is an enabler, reducing the cost of run and change, helping to close the cost-to-income gap to our peers. We are making good progress on UNITE. There have been no overall changes to the program's scope, time line or budget since our full year results presentation last November. Minor modifications have been made and are likely to continue to be made given the nature of the project. We've completed the first large-scale migration, and we're getting through foundational work, including building test environments and data optimization for future migrations. UNITE is being delivered through a central team of almost 1,800 people who draw on expertise across business and technology. This is supported by a strong governance framework. This framework provides clear and ongoing oversight and accountability from management through to the Board. The data, digital and AI team supports the central team, and we are developing a set of practical AI solutions for UNITE. Impact assessments and testing are 2 areas where AI is contributing and can be scaled across multiple initiatives. Impact assessments are a key dependency for the majority of the UNITE initiatives. AI supports these by reducing the time it takes our teams to identify data lineage and assess downstream impacts. It has delivered more than a 50% improvement in efficiency, reducing impact assessment completion times from approximately 10 days to fewer than 4 days. A separate AI capability supports us with testing. Testing also sits on the critical path for many UNITE initiatives and is a key factor in delivery time lines. A suite of AI testing tools, agents and agents are being used by our teams to lift productivity for a smoother transition into delivery, and we're seeing pleasing results. While this progress is encouraging, it is too early to extrapolate. AI is demonstrating positive early signs, and we'll continue to mature and scale how we use it right across UNITE. Activities are underway across consumer, business and wealth and the Institutional Bank, and we're seeing how improvements are creating more connected banking experiences for our customers. We are using digital banker to serve retail and business customers. It provides a single, consistent way to capture customer interactions and understand their needs. With customer information in one place, our bankers are better equipped to have more informed conversations and deliver consistent service. The rollout of the front-end platform to our bankers is now complete, and we'll continue adding more servicing capabilities this year. [ Secure ] Live chat is now available in the Westpac app, giving customers a simpler and more connected chat experience. We've consolidated 2 platforms into one, allowing customers to enjoy secure conversations with bankers via the Westpac app. Last year, we shared how we are simplifying mortgages end-to-end across product, process and applications. This represents a significant body of work within UNITE, improving both customer and employee experiences. The sale of the RAMS mortgage portfolio contributes to the streamlining of our operations. It has also taken some pressure off UNITE since these customers no longer need to be migrated to the Target Westpac platform. In Business Banking, the controlled moneys initiative has delivered practical improvements for professional service companies. It digitizes processes for customers across legal, accounting and real estate firms who hold client funds on trust. Last weekend, we completed our first large-scale migration under UNITE, moving 60,000 Asgard customers onto our wealth management platform, Panorama. We now have more than 300,000 accounts with funds in excess of $150 billion on Panorama. This was a complex migration that we executed safely and as we planned. Customers now have access to a more sophisticated and award-winning app experience with stronger security and broader investment choices in one place. Employees are working in a simplified structure with fewer processes and far less risk. A single wealth platform reduces complexity and cost, allowing us to compete more effectively. The One Wealth platform initiative cost approximately $17 million, most of which has now been incurred. The savings are anticipated to be fully realized after decommissioning of the legacy Asgard platform. Today marks an important milestone for Westpac with the announcement of One commercial bank. This will simplify our banking technology and is a crucial step towards decommissioning Commercial Hogan and other legacy systems. As part of this migration, commercial business banking customers and employees from St. George, Bank SA and Bank of Melbourne will transition to a consistent banking experience and single brand under Westpac. These businesses will have access to better digital capabilities and a broader range of products and services, including real-time payments, flexible merchant solutions and our market-leading banking app. The migration has been carefully planned and will be managed closely through disciplined execution. We have also applied learnings from earlier migrations, including One private bank in which 99% of customers were retained and wealth platform. To support our execution, we've designed One commercial bank to be a digitally enabled migration, which is relationship-led. This reflects the importance of continuity in customer banker relationships. I saw this firsthand when I was in and leading business and wealth. Strong relationships built over time help customers navigate change and gives them confidence to grow their business. For this migration, commercial customers will remain supported by their current relationship managers and local banking teams from start to finish. This means bankers will also move with their customers to Westpac and remain embedded in their communities after the migration to provide a seamless service experience. Understandably, this was a big change for our bankers to initially digest. Once we talked through what it meant for them and their customers, their response was very positive. With simpler systems and technology to use, they can spend more time serving customers while offering them a broader range of banking products and services. Our aim is to consistently be #1 in NPS. We intend to start the migration of 75,000 commercial business accounts onto the target ledgers in the coming months. For this migration, continuity of customers' banking arrangements is paramount. We have completed foundational work to align policies and procedures so we can provide unilateral variation for 95% of customer accounts. This involves directly transferring our customers to like-for-like products, delivering a digital experience without the need for reidentification or any additional product application forms. SME and small business customers are not impacted by the changes announced today. The capability developed through the initiative positions us well to support future migrations as we continue to simplify the company. In summary, UNITE's progress is on track with no changes to overall scope, time line or budget. We've completed a major migration, moving Asgard customers to Panorama to give customers a better overall experience and operate on One Wealth platform. And next half, we'll commence our first large-scale banking migration as we create One commercial bank. There remains lots to do, and we are ready for the challenges ahead. Peter will now provide you with a more detailed update on UNITE's progress.

Thanks, Anthony, and good morning, everyone. Across Westpac, we're progressing a broad transformation agenda driven by both enterprise initiatives and UNITE. Since finalizing the scope for UNITE last year, we've spent the past 6 months focused on delivery. We're making good progress and have achieved all major milestones for this stage of the program. Clear alignment, openness and accountability are helping our teams collaborate effectively and stay focused on what matters most, delivering for our customers, our people and our shareholders. As an ambitious multiyear program, UNITE relies on disciplined and steady execution. To support its delivery, we establish clear responsibilities and governance from the outset. UNITE is business-led and tech-enabled. In practice, business-led means that each segment, namely consumer, business and web, are responsible for the outcome of their initiatives. Group executives are accountable to and supported by a monthly executive steering committee. Reporting directly to me are experienced transformation leaders and the UNITE Chief Information Officer. Collectively, they manage a centralized delivery team of approximately 1,800 people. Dedicated resourcing from the technology, data, digital and AI teams provide the core technical capabilities needed for the program. This team structure supports an enterprise-wide approach to completing initiatives rather than by business-by-business execution. With the governance structure in place and the project scope set, we retested the optimal delivery approach. This allowed us to take a step back and consider all downstream impacts for each of the 57 initiatives. As a result, we grouped the initiatives into 10 work packages for more effective execution with end-to-end accountability. It has also provided a clearer basis for sequencing work and allocating resources. Of the 10 work packages, the first 7 are domain-based, reflecting the area of the bank where the change is happening, for example, in mortgages or business banking. They focus on simplification activities with an emphasis on process and product readiness. The remaining 3 work packages cover the common elements required to complete the domain-based work. I'm pleased the overall scope, budget and time line remain in line with that already disclosed. We invested $195 million in the first quarter as the program accelerates towards a steady operating rhythm. This puts us on track for spend within our previously disclosed FY '26 guidance of $850 million to $950 million. We expect UNITE to represent approximately 40% of annual investment spend in FY '27, '28 before stepping down in FY '29. The 10 work packages contain a total of 57 individual initiatives. Across the program, 8 initiatives are complete. That leaves 49 still to be delivered, of which 3 are yet to commence. We're tracking the progress of the 46 in-flight initiatives against the traffic light framework. As at today, 38 initiatives are rated green, 7 are rated amber and 1 is rated red. Overall, this represents an improvement since our last update with more initiatives rated green or amber. The initiative in red is the debit card simplification project. We faced some unforeseen challenges and with this and have clear actions to get its progress back on track. The status of initiatives will move throughout the program. For instance, the one commercial bank initiative recently moved from red to amber. This initiative was in its early stages, and we took additional time to confirm readiness and planning maturity before proceeding. We closed these gaps by running a proof-of-concept pilot, which showed the migration tools and processes we design worked in practice. Insights from this informed a detailed and integrated delivery plan, which has now been agreed across all work streams. As a result, the initiative has moved to amber as we get ready for migration. During the past year, we've deepened our experience through the private wealth migration, recent Asgard to Panorama migration and invoice financing, which is set to complete this month. To support future migrations, we're also undertaking preparation work such as our channel simplification, for example, the rollout of digital banker and the consolidation of 2 chat platforms to 1, a new capability to archive customer data, helping to manage historic records and the future decommissioning of legacy applications and the development and deployment of new AI tools to automate assessments of downstream impacts and testing. UNITE comprises 4 stages with the first stage discovery completed last year. The program delivery encompasses the work underway across the remaining 3 stages of the project. The second and third stages of UNITE are simplify and implement. We revised our progress is measured across these stages. Previously, progress was based on the number of initiatives completed, which we presented in March and September. Given the variation in size and complexity across the initiatives, we believe measuring progress against key milestones offers a more accurate representation of the work completed and the activity remaining. Prior periods have been restated on a like-for-like milestone basis. For decommission, there is no change, and we continue to measure the percentage of plans applications we have retired, which lines up with the bulk of the cost savings. We don't expect further modifications to the measurement of progress. We're committed to transparency, and we'll continue to provide regular updates on our progress each reporting period. Moving to progress on the delivery stages. Simplify involves leveraging the strength of our existing products, processes and systems to adopt our One Best way. This has progressed from 29% to 44% complete. Implement will address the complexity of our multibank systems. This is where a significant share of the test and migration readiness work is concentrated. It has progressed from 13% to 19% complete. And finally, decommission in line with our plan remains in the early stages at 10% complete. One of the major objectives of UNITE is the move to a single deposit ledger. The decommission of Commercial Hogan is the first step, reducing deposit ledgers from 3 to 2. Commercial Hogan currently supports 40,000 customer accounts across wealth, commercial banking and other business deposit products. The migration of these accounts to Westpac's core ledger trading bank will help us run more efficiently, innovate faster and realize economies of scale. Decommissioning the ledger involves 3 separate migrations. Each accounting for between 25% and 40% of the total accounts required to transition to Trading Bank. As part of the One Wealth platform initiative, 10,000 cash management accounts were migrated to Trading Bank. The second migration involves moving commercial customer deposit accounts to Trading Bank. Importantly, we have planned this to minimize disruption to customers and make it as seamless as possible. Anthony mentioned that to maintain customers' banking continuity, we're primarily using unilateral variation. Payment continuity is also critical. The majority of customer payments will be automatically routed to the new accounts with no customer action required. This particular migration will be undertaken in controlled stages with close banker engagement consistent with the principles we have applied across other migrations. However, the full financial benefits are expected to be realized post decommissioning, including the avoidance of a significant systems upgrade and lower operational complexity and therefore, reduced risk. Finally, turning to our major focus areas for the second half, which includes commencing the significant One commercial bank migration. Mortgage simplification is one of the largest collections of initiatives within UNITE. The work will reduce complexity by halving the number of mortgage products and systems and streamlining end-to-end processes. This year, our priority is the get ready activities within the simplify stage. Implementation and decommissioning will follow in the coming years. So far, we've completed the multi-offset initiative and harmonize mortgage products for consistency across elements such as terms and conditions. In the second half, we'll get through more foundational work. This includes building the more complex mortgage structures into the target state master and migrating data for a single consistent view of property security. Given the scale and sequencing dependencies, the mortgages stream continues right through to the end of the program. We've rolled out the front end of digital banker, a one-stop platform now used by 6,000 bankers to serve our customers. It gives our bankers a complete single view of customer needs and interactions with no more jumping between screens and systems. Our focus for the next 6 months is transitioning the first service requests on to digital banker, strengthening customer authentication and controls and expanding its sales capability for better customer interactions. For collections, we're moving consumer products from 7 platforms to 1 called Assist Now. This aims to provide faster and more flexible service to home loan and personal finance customers who need extra support. We've completed 2 migrations to Assist Now and plan to expand this to personal loans and regional brand credit cards during the second half of this year. Debit card simplification, as pointed out earlier, will address our complex set of debit card products and supporting platforms. We're simplifying this landscape by reducing the number of debit card products and consolidating card management into a single platform. Our focus for the next 6 months is completing the migration of Handycard to Debit Mastercard to enable the decommissioning of One legacy platform. The target state is a simpler product offer for customers, reduced operational complexity and lower technology risk while improving our ability to manage and scale the platform over time. The common theme here is that we're now well into execution and developing repeatable capabilities. We'll be clear on the milestones that matter, readiness, migration waves and the decommissioning pathway that follows. As we build further momentum, you can expect to see more evidence of delivery, completed migrations, reduced complexity, measurable improvements in stability and change capacity. I'm pleased with the progress we've made to date. UNITE is well structured, well governed and progressing in line with our plans. We're confident in our ability to deliver the remaining stages and the benefits they support. Thank you for your time.

Thanks, Peter. Don't worry about clapping. We're only halfway.

So we'll move to questions now. Anthony and Peter, if you just join us up here on stage, while we've got plenty of time for questions [Operator Instructions] So we might start at the front here. And if you can state your name and affiliation, especially for the benefit of those online, please.

Andrew Triggs, JPMorgan. Anthony, you talked about AI in the context of impact assessment. Just interested to sort of flesh out just the use of AI and data cleaning and migration processes and particularly the attitude, I guess, of the various regulators that you deal with around potential failure if Westpac takes a sort of AI-led best efforts, but cost-efficient process. What -- how does that sort of work with respect to regulatory?

I'd like Peter to make a few comments on how we're actually day-to-day using it. But I think people need to take a step back. AI is a tool. And what we're doing is setting up with everyone in the company to use this tool, and we're finding that it could be particularly helpful tool to the way we execute UNITE. There's no abrogation of ownership or responsibility for the outcomes that we need in delivering Unite. AI is a tool that could help us do it faster. It could help us do it in a more efficient and we think a safer way. But we have got to establish and prove that, a, to ourselves, b, to the governance that we have at Westpac and then clearly to the regulator. And so that's why to sit here today and say we think it is actually really powerful and really effective and efficient. But to then make a representation that we can pull everything forward and we can change everything that we do is not the right way to approach it. And as I said, we've just simply got to use this tool, and we've got to demonstrate the outcomes, and we've got to bring everyone along in how we use that tool and the outcomes we're delivering. So long answer to the question, which is we are using it. Yes, we think it's really impactful. And yes, we think it's going to have a lot of -- a big contribution to make, but we do have to bring the regulator along. We do have to bring our governance team along. We do have to bring the whole bank along on this one. And so it's -- that's the answer.

Just a follow-up. The second half '26 milestones that were listed, there's a long list there, but I think noted most of foundational in nature. Are any sort of individually or collectively material to the 2027 cost outlook?

So we've got our cost plans for '27. There's definitely some contribution that will come to what we are aspiring to achieve in '27 that comes from UNITE. But the broader benefits from UNITE and its capacity to help us drive a lower cost to run and change of the bank, it starts to be really realized, frankly, at the second half of '28 going into '29. So yes, there's some contribution, but candidly, it's much more back ended than that.

We'll go -- is that fair?

Matt Dunger from Bank of America. If I could just ask about some of these dates you've given following up on Andrew's question there. The expected completion of the One commercial bank in December 2027. What sort of time frame before we see the cost benefits from the decommissioning? How long does that take?

Yes. So as I said before, between the Asgard Panorama migration and one commercial bank, that will take 65% of the accounts on CHS. Sorry, I don't know where you're located around. So apologies. So we won't -- we'll see more of the benefits again back into '28 once we are able to migrate the residual 35% off, which we're in the process of planning to and then fully decommissioned CHS.

That's Hogan, by the way.

That's right. And what's important to realize is that the decommissioning is where we start to really see the value. But you've got to get everyone off the particular system. And we think we'll get many, many of very, very quickly because of the attraction of being on the Westpac stack and the offering we have. But there will always be 1 or 2 cohorts that actually it's going to take a lot longer. And so we've just got that in our plan, but that's why it's just important that the benefits are realized when the decommissioning is complete, and it's back-ended, therefore, in its nature.

The one supplement to that, sorry, which obviously isn't in the numbers that we do reference in the slide was in order to continue to support commercial Hogan, it would require a really significant update -- upgrade, sorry, to the tune of about $400 million. And so obviously, that's avoided but not within the numbers. So there wasn't a kind of do nothing option here.

Matthew Wilson, Jarden. Just to be clear on the targets, the CTI target, the language seems to have changed from lower than peer average to close to or close the gap. And the ROTE target doesn't appear in the presentation.

So the goal is lower than peer average. So language bringing that discipline to it, Matt. But no, absolutely, the focus is lower than peer average.

And then just a follow-up to the migration of the One commercial bank. As you move from Bank SA, Bank of Melbourne, St. George, does my BSB and account number change?

Yes, it does. And -- but more importantly, the way we've designed it, and Peter, you're allowed to, of course, correct me on this. But the way we've designed it is that the customer does not have to do anything as a result. And so therefore, it's -- and hence, the work and hence, the preparation, which is to make sure that the customer does not go through any -- or is not impeded nor is challenged to do more than what they should otherwise have to in migrating across from this platform to this platform. So same products, same range of services they get. We'd like to think actually that when they're on the target stack, there's even more we can do for them. And so that's the design, and that's the outcome.

Leave the mic there, Brian, and maybe just play parcel, please.

Brian Johnson, MST. I'd just note that, that thing about the account number and the BSB, that's different to what we said historically. But that said, if we look at it, you're talking a lot about consolidating the tech and consolidating the products. I'd just be interested, what does that mean for product flexibility? And also, what does it mean do you actually need to have this multitude of brands? So product flexibility and what ultimately happens to the brands. And I'm not just in retail banking, but in business banking.

Yes. In terms of just -- I want to answer the brands, the whole program of UNITE is reduce the multitude of bank systems, consolidate onto one so that we can realize the benefits of our scale in the marketplace by just doing things One way. And we can and will have a multi-brand framework. But it's all about how do I get everything done one way so that last I have some, if you will, some benefit from the scale that we have in the marketplace. In terms of product flexibility, I suppose there's 2 things to that. And Peter, again, please correct me if you disagree. But we certainly have a proliferation of products across multiple bank systems. So we want to get everything done one way on one system. And so we're making sure that we, therefore, have the right product range to accommodate all of the current customers we have. Does that then mean we don't introduce new products because new product is needed for new market opportunity? Well, the answer is we are always and willing to look at those opportunities as we go forward. But it has to be done on the One target ledger that we've agreed, and it has to be done following certain one-way disciplines we've agreed for the company. So we don't have the mistakes of the past, a proliferation of products and processes, which just add complexity and risk into the whole bank.

Anthony -- sorry, could I just add to that? One of the problems at Westpac has been the fundamental conflict between some of the brands. For example, if you have a look on business banking, at one point, St. George bankers in business banking had higher limits than Westpac, higher risk tolerance. How do you ensure -- like this is about cleaning up the back, kind of getting the brands. But how do we ensure or can you make a commitment that we won't see Westpac competing against itself? Like St. George customers competing against Westpac business customers. That's one of the big problems that Westpac has had.

Yes. Well, so thanks for that challenge for that question. That is absolutely what we're going after, Brian, which is we do things one way, that we don't have a multitude of banks within the group, led by executives who may choose their own adventure. This is one way of doing things on the one target tech stack, and it is about then delivering the scale and the benefit of that. And more importantly, it's not just the run and change costs that we do. It's just a safer bank to run if we do things one way. So that's the mantra that underpins one way, and it's one policy. It's one product. It's one technology. It's one process by which we follow. That's the discipline we're trying to drive through the entire company.

If I can just comment on the product piece. So we've done a couple of things. So the first one was then to complete product and service mapping from the regional stack into the Westpac stack. And as an example, we found that the controlled moneys was a superior product on the regional stack. So we've deliberately uplifted -- we think that, that 41 product offering is the right set of offering. The challenge we had with the 81 was there was about 414 variants underneath that, and that's a huge amount of complexity. So part of this is what's the right on-sale product set? Does it meet or beat the market and then removing all that variation, which drives all the operational complexity.

John Mott from Barrenjoey. I've got a question on the traffic light system. And if you look from what was happening back in November to what's happening today. So in November, you had 5 initiatives in red, it's now 1, amber 13 to 7 and green has gone from 20 to 38. So it looks like all of a sudden, the projects and the initiatives are going much, much better than you'd anticipated. Now I understand you're marking your own homework here, and there is some element of that. But can you comment on why you've all of a sudden seen such a massive improvement on the only thing that we can actually measure on how you're performing?

Yes. So let me just -- I'll comment on the marking our own homework. So it's fairly well governed. We've shared the governance process, but there's obviously Board below that a subgroup of the Board, the exact piece. We obviously have our second-line teams nested. We also have independent oversight from McKinsey. They have close sessions with the Board every quarter. So I think we're incredibly well governed, and I certainly don't feel like I'm marking my own homework. In terms of the transition, I think a couple of things. The first one was it was absolutely right that we had a federated approach to how we plan the initiatives on an end-to-end basis. As we transition to execution and we centralized the teams and repackage that, we've been able to resynthesize and reorder the work, and we have a much clearer longer-term plan. And I think that's what you're seeing play through.

So does it mean it's going better than you thought it was 3 months ago?

No. It doesn't mean it's going better. I think we have a much clearer view, and we've got a better execution cadence. What I would say is this is, as I said when I spoke, I fully expect that this will have ups and downs as we go through the program. It's really confident.

It will go up and down. And John, I'll just say my anxiety levels are not any lower than they were 3, 6, 9, 12 months ago. And maybe I might even venture the fact that there's a bit more green means I am more anxious because you're right. We've got to make sure that we don't trip here and we don't kid ourselves of where we're at. But with all of the rigor we've put in place, with all the governance we've put in place, this has been what has emerged. But equally, I'm not forecasting this, but I can expect and I am anticipating that there'll be more red and yellow as we go through the next 12 months because it's -- we're into it now. And as we execute, things change, things revolve.

Victor?

Victor German from Macquarie. Anthony, I just wanted to follow up -- I'm just down here. I wanted to follow up on the earlier question related to AI, you're 18 months and 2 years into the project. And I think initially, people, including myself, were worried that these projects take longer and cost more. Now having kind of gone through to where you are now with potential AI benefits, I understand it's early days. Do you think we should think of this as potential upside risk? Or should we think of it as a minimizing downside risk?

Yes. Please, Peter, you're allowed to take. And then I invite you to speak to Andrew McMullan afterwards, our Head of Digital Data AI across the bank. But I'd hate to tell you what to think -- and so what it is, though, it is showing us that there are things that we may be able to do faster, and we've certainly been able to prove to ourselves we can do things more consistently. And so there's a value in that. But just what really important for me, what is really important for the executive team in Westpac is that we don't talk about these things. We don't talk about what we're going to do, that we get them done, and we will then highlight to you what we've achieved. And so I'd ask you to be patient with me on that. We would love to bring the project forward. We'd love to achieve a lot more. But most importantly, we just got to get it done. And then the second stage is, can I get it done more cost effectively? Can I get it done a little bit faster? That is the exam question we're going after every day. And we think AI, one of the tools that we have is going to potentially contribute to that. But until we're doing it, until we've done it, I don't really want to talk about it.

Maybe I'll put it another way. Assuming AI benefits do not come through. So all of the early test cases, just -- let's say they don't work, do you still think you're able to get to the end of the project in time yet?

No, no. So let's be clear. We -- that is the thing that we will not let go of is we must deliver this project. We must deliver it on time. We must deliver it on scope, and we must deliver it on budget. That is the rule. And so everything is informed by that. And if we can go faster, then wonderful.

Andrew?

Andrew Lyons from Jefferies. Anthony, today, you've reiterated the CTI target, as was noted earlier. Can you maybe just talk to what extent is that objective driven entirely by the UNITE program versus the need for broader productivity initiatives such for the Fit for Growth program that was announced at the last result? And maybe what costs should we expect like incremental restructuring costs that might be needed for some of those broader productivity initiatives?

So there's no way we can get to where we need to get to on the cost-income ratio without UNITE because it's not just a causal contribution to a lower cost of the company, it's an enabler. And unless we're doing everything one way on one target technology stack following one process using one policy, there's just no way we can get the cost to where we need to get to. So it's both causal contribution to reduction in cost, it is an enabler, but it also doesn't aggregate the fact that we still have to do other things and are doing other things, and that's something that particularly with Nathan's partnership and leadership, we're very focused on is making sure that all of the other things we should be doing to get this company's cost to run to where we aim to is on track. And so Fit for Growth, we're pleased with what we've set out to do, and we're delivering what we set out to do. The question for us is, can we do more as a company outside United. And that is what we're currently working through as to whether we can do more because I think we have to be honest with ourselves. We need to be relentlessly going after more always and everywhere, and that's what we're trying to do with the company.

Just a reminder to those online, if you would like to ask a question, we haven't got any online at the moment. So Richard has got the mic.

Richard Wiles, Morgan Stanley. Anthony, you said a few moments ago that most of the material benefits will emerge in the second half of '28 and into FY '29. Your comments during the presentation suggests that those material benefits are driven by system decommissioning. That's the big sources of cost savings. And I think you also said that you're about 13% of the way through the decommissioning milestones. Is that a fair conclusion about how we should think of the realization of cost savings from Unite?

So 2 aspects. Absolutely, in terms of Unite's causal contribution, literally the switching off things, yes, it's much more back ended. And then the fact that we're doing things one way on one technology stack is the unlock that allows us to go harder on other costs. And then, of course, we've got the other programs that we're going after across the group in terms of how do we run this company more efficiently -- safely and more efficiently.

Brendan Sproules from Goldman Sachs. Just a couple of questions on the retail migrations. Obviously, not a lot of detail here today. Would it be fair to say that mortgages and retail deposits are really scheduled around that FY '28 year, and that drives the peak of the investment in that project? And then I have a second question.

Yes. So it doesn't drive the peak. What's driving -- if you look at what our spend for this year, next year and into '28, it's really around the harmonization, some of the integration and the scaling of our target platforms. And that's why you see that come off in '29 as decommissioning is a relatively small amount. You're right to say that the deposit and mortgages are scheduled towards the back end of '28, but the spend here is to get the systems ready.

And just my second question is just on the complexity of the implement phase. I mean a number of the ones that you've implemented to date are actually a relatively low number of customers in the tens of thousands. Obviously, when you get to these large retail integration, you're talking about millions of customers. How more complex is the number of customers in this sort of process?

Do you want to have a...

It's the right observation. But that's why we've very deliberately approached it the way we have. So we're starting with private wealth, where we've built repeatable process. We have built the teams to support it. We understand the way the migration patterns need to be built so that you build up to these things, not start the other way. And we -- that's a really sensible controlled way to approach this so that we've got the muscle and we're sort of match fit for it.

Yes, that's certainly -- we learned a lot with the private bank. We've brought all that to bear in the context of one commercial bank. In preparing for one commercial bank, we learned so much, which is now being, if you will, built and invested in the context of making sure that when we do the larger migrations, we capture all those learnings. And on the one hand, the complexity of the commercial customers and the private bank customers with all of the different ways in which they deposit, whether it be through trust, whether it be corporate entities individually, et cetera, there's a huge amount of complexity there. But clearly, it will be a simpler customer complex, be just a lot more accounts. And so on either version, it's complex on either version, it's simpler. And so that's the -- but we are absolutely layering into the company what you need to do to be able to do this migration, this set of migrations safely.

Can we get the mic maybe into John there? Hand up first sorry, along the -- thanks, Andrew.

John Storey from UBS. Just wanted to check a few of the numbers with you this morning. Just in terms of the upfront costs related to the one commercial bank, the $230 million of annual savings that you're calling out and then the $40 million per annum, how does that back into the upgrade costs avoided of $400 million? That's the first question. And then I guess just related to that, the $3 billion number that you provided, why does that not reduce effectively by the $400 million? And then I think, Anthony, to what you were just talking about now, obviously, as you've kind of gone through the private bank migration and you're obviously going through the commercial bank migration now. Do you think there will be an opportunity potentially to also avoid some of the costs in the retail side of the business, right? I'm thinking about some of the smaller brands that you have. Obviously, the big one is obviously St. George, integrating those 2 businesses. But do you think you could find a similar type of opportunity to what you found in the commercial bank, right, in terms of cost saves?

Well, do you want to?

Yes, let me start. So the cost is $230 million, the benefits at $40 million. And really, the $230 million is partly obviously the cost to deliver that program, but also a lot of the repeatable processes and tooling, et cetera, built for future migrations. We haven't -- the $400 million cost avoidance isn't within the $3.5 billion, and it's not captured in the benefit. But it's a real number. We've chosen not to put those sort of cost avoidance numbers within the broader numbers that we communicate.

In terms of -- John, I hope I'm answering your question accurately. And if not, I'll have you discuss afterwards. But in terms of the way to think about that question around, is there more savings to be made by other brands? The brands aren't the cost. It's the bank systems, the multitude of bank systems, that is the cost and the complexity introduces. So getting everything done one way on that target stack is the unlock. Whether you have all brands or more brands or less brands is somewhat secondary in terms of thinking because that's not the cost here. That's not the complexity. It's a multitude of systems and processes and technology and different policies. And we're just getting all of that done one way. And then, of course, we have that scale. And then you can think more selectively around the true value and how that brand positions you in segment, region, et cetera.

Ed, I think you've got a mic there.

Ed Henning from CLSA. Just going on to a bigger question. If you look at Slide 32, you've got all your major projects there and the direct savings. Can you just clarify for us that the biggest effect is the cost savings from those direct projects? Or is there more beyond this that will come from Unite? Or is it really just the savings you talked about before where Unite is enabling you to get other savings that come through the direct -- the cost line at the bottom?

So I'll make a comment, but please, Peter has done the work, okay. Point is this sort of draws out the direct causal reduction in cost as a result. The fact that we then have other things that are enabled because we're doing things one way is outside of that. And then, of course, we have other initiatives on cost with all of that coming together to allow us to target that below peer average cost-income ratio. The point being is we can still do what we've been doing, which is, call it Fit for Growth initiatives. We'll always be going after that. That should be a never-ending relentless exercise. But we can't really break the back of getting the cost to run down until we get UNITE done, both quarterly and because of what it enables. That's the way to think about it.

Yes. And just to supplement, so the -- we've deliberately put in here just the direct benefits -- but Unite does enable the opportunity for further reduction in terms of operational complexity. Again, by reducing 70% of the products through the harmonization and standardization work that obviously then provides the opportunity for business simplification, operational simplification, buys down risk, et cetera, et cetera. So it's an enabler. I think Anthony framed it well. We have to do UNITE to enable those other activities to happen.

Yes. And that goes to the question before about AI about either doing it cheaper or hopefully doing it faster is you need to do this. So hopefully, AI makes you go faster as opposed to significantly cheaper and over the same time frame.

Yes, whether it's AI or other things, how do I go faster. And hence, decisions around RAMS that makes sense in the context of this group that has enabled us to get a bit more done or reduce the drain on getting things done in UNITE. So that's helpful. And so those are the decisions we're just going to grind through as we move forward.

We've got a couple of questions online. We might take those before we circle back to other questions. So first question online, [ Midang ]. Thank you for organizing this update. Pleasure [ meet ]. As UNITE is rather a large project, are there any initiatives or goals prior to Project UNITE that have had to be put on hold due to capacity?

Well, there's definitely lots of things we want to do. And my job is to prioritize what needs to be done. And with the leadership team I've got, make those choices. There is definitely things that we will do once Unite is complete. Equally, there's so many things we cannot do unless UNITE is complete. And so -- but we're also -- and I know people worry about this, but we are also advancing the company and making investment, for example, in Westpac One, Biz Edge. These are really transformational uplift programs that really put us in a really privileged position in those 2 businesses. And so UNITE, however, is a critical priority for us to be able to be the company we want to be in 3 to 5 years' time.

The only other thing I'd add is UNITE -- as part of that consolidation, I talked about whether it's multi- offset for mortgages or controlled moneys, the uplift. So their investment in a better set of products. We've talked about digital banker. That's a better front end for our staff to use. So there's also upside investment.

Our next online question is from Ravi [indiscernible]. Where do you anticipate the most customer friction as part of UNITE platform consolidations?

I think -- so I think if we take one commercial bank, I mean, we've got -- obviously, we banker led work with the customers. We expect -- and we sort of learned through the private wealth migration. We need to work really closely with our customers around some of the new tools and capabilities that we're delivering to them. They think they're very intuitive, but they are a change. So while it's a better -- we think it's a better proposition, a better set of services, helping our customers use those to their full potential, I think there's some work we've got to do.

Look, the way I draw this one out, and it's sort of universal across all of what we're doing, customers don't want to have to do something different and don't want to have to do something extra. And so all the work we're doing is to make sure they don't have to do something different or extra. And if we do ask them to do something extra that we make sure it is a really superb and very, very easily navigated request. And so where do I anticipate the most customer friction as part of UNITE platform conversations is making sure the customer doesn't have to do something different or extra. And if we ever do that, that is so easily done, so intuitive, so natural, actually, they don't feel like there's been an impost upon them. And that's why it's hard work, and that's why we're investing as we are, and that's why it is one of just -- let's just get this right progressively through time rather than sort of a mad rush to do it.

We've got 5 minutes left, so we can circle back, Matt? -- row is popular again.

Matt Wilson, Jarden. Just to follow up on John Storey's question. When this project -- when you embarked on this project, it was $3 billion. We thought it was $3.3 billion. And then Peter has just answered a question and said it's $3.5 billion. Is that true? And if we continue that run rate, we're looking at $4 billion to $5 billion probably at the end. How are you thinking about inflation? And is $3.5 billion the correct number?

So $3.5 billion has been what we've had in front of people for a while now. So...

Maybe I'll take that on disclosure. Yes. So the maths have been pretty clear. We can take that offline, Matt, but it has not changed for at least 9 months in terms of that part. there will be some flex on that FY '29, but it certainly hasn't changed in that period. The initial estimate when we're very early in the project was rougher and that number was lower.

Yes. And the inflation element? You've caught on nominal numbers before.

Yes. So I mean, absolutely, and that's sort of part of why we think there's lots of things that are helping us do it faster, more efficiently. But let's also recognize that we'll find things that are harder. We'll find services a bit more expensive. And so until we've done, we should not be representing or positioning. And so I just -- hence, the sort of caution we just got to execute this. We're very clear on what we need is the outcomes. We're very clear on the financial discipline we've set ourselves in how we execute this. And there are things where we've gone better than we thought and there's things where we haven't gone as well as we'd hoped, and that's squaring out. And that's why we're here today to say we're on time, we're on budget and we're on scope. And we just continue to maintain that discipline. And even though there's lots of things where we might see unlocks or opportunities coming our way, we just simply have to stay the course.

Brian, you've got a mic.

Brian Johnson, MST. Just on Slide 10, just to clarify something. So this is the slide that shows the investment spend over time gapping up. And we know that 75% of it is expensed. But what I'd like to clarify is that if you look at that slide, you can see in the smallest font imaginable, which I've noticed is an Australian bank unique thing. The important stuff is always in the smallest font. But if you have a look at the total investment spend, $2 billion per annum, 40% of it going into this, that figure -- that implies that it goes to $800 million, and there's probably a little stub after that of about, I don't know, $400 million to get to the $3.5 billion bill. I just want to clarify that when we get to '27, we get a declining investment spend of which 75% is expensed. So expenses go down in absolute dollars probably by about $100 million, but that is over and above the sequencing of the savings coming through. So in '27, is there a cost out mechanical cost-out dynamic from this?

Maybe while you're thinking of that, Anthony, your math is pretty good, Brian. your math works on that.

Yes.

Well, it's your slide, Justin. So my math works and your slide between us, that's a very powerful argument. There is actually a cost-out dynamic in '27.

And we have to deliver.

But there is -- can I just go back to the question? Is there a cost-out dynamic in '27?

So that -- well, that's what the numbers put out. you're looking for something here, which is, yes, the intention is that there will be cost savings, okay? And we will have cost out. what I need to deliver is a total cost out across the whole company. Now whether it's in Unite or other parts of the company is sort of like the next order question, but we need to make sure we hit our cost targets and deliver the outcomes for -- well, deliver on what we've set ourselves. So yes, your math spills out, then that's exactly what we have to deliver through the course of '23.

Anthony, this is a really important point. That's over and above whether it works or not. That's correct.

But bear in mind, the overall investment envelope is roughly $2 billion. So it's -- that's implying non-UNITE spend is going up.

Yes. But just mechanically, Project UNITE, I just -- it's really an important point. And I think Nathan is saying yes. So just to clarify, there is a cost-out argument in '27 just from the declining investment spend. And then if we have a look at Slide 32, all the incremental cost outs from that, it gets bigger again. Is that correct?

5 Yes. And so it's Nathan Goonan, CFO. The way I would think about this is, Brian, we're not saying precisely where we land in FY '26 here for UNITE. So there's a $100 million range here between where we will. What I would expect to happen in '27 is that we will have reasonably consistent investment spend in totality and reasonably steady-state UNITE spend from where we land in '26. Depending on where we land in '26, between the $100 million range, you could see a slight step-up of that. And we'd have more to say about that as we get through the year. But I think the important fact that we don't have is just let's see where we land in '26 and then we can have a conversation about '27. I'd expect UNITE to be relatively steady into '27 and total investment spend to be pretty steady in '27 as well.

We've got another online question. Phil [indiscernible] . Can you give us some extra details on what has driven the small cost increase in the mortgage simplification program, and that's shown on Slide 32, please.

Yes, absolutely. So obviously, the initiatives has come down with the removal of the RAMS business, and then we've had some additional work around both data and the collateral management.

Thanks, Peter. We'll probably have time for one more before we switch off. John, you've got the mic there.

Yes. John Mott from Barrenjoey again. Just another question on this monitoring process. So you've gone from a number of initiatives down to milestones, and it looks like you're flying through it. So just over the last couple of months, you've gone -- implement gone from 13 to 19. But you've also said all the big projects haven't really started, especially in the retail bank. If you actually weighted it and said, okay, let's wait it based on the benefit or even the spend, where would you be?

In terms of how far...

Because you're basically saying, look, we looked at the initiatives, but let's go away. We're now at milestones, like what's the milestone mean, especially when some of them are very big and you haven't even started a lot of these things. So if you think about it from the actual benefit that you're getting, is there a different way of measuring it where we can actually look at it and say, we can get it and then we can hold Nathan to account in a couple of months and years on how it's actually coming through rather than just tick a box on an initiative.

Yes. I think, as I said, if we were to look at the 57 individuals and just report to you sort of here's where we think they are in terms of RAG. I think that's one way of doing it. That's certainly the way we previously looked at it. We don't think it provides as much transparency as saying here's the total number of milestones broken down in those individual initiatives and here's how far through we are of each of those. So I mean, happy to post us have a conversation if you think there's a better way we should be demonstrating that. But...

How many milestones are there? Like is the thousands of them, like...

Approximately 2,074. No milestones will change. Some will come in, some will go out, some will be consolidated, but broadly, that's what we like.

Guys, it's a very large project with a whole layer of complexity. And as you execute, things will change. And so it's -- and happen though, but -- and would appreciate any thoughts on further granularity, but it's also a project and things will move around. What we wanted to make sure is we're very honest with you about are we getting to where we've set ourselves as a goal to get to. And so we are making progress. I mean I would like it to be a bit more than that. But we are making the progress, and we feel we're on time, on budget and on track to deliver.

But the discovery donut, there's a lot less spend there than, say, implement, which would be the largest spend bucket. Richard, you look really keen. So maybe we'll finish with you on the question, making a good one.

Richard Wiles, Morgan Stanley. Can you give us a list of the 57 initiatives so we actually know what the whole program involves?

Yes. We'll take that on notice and work with Justin.

Yes. Thank you. Great question.

Thanks for joining everyone online and come through with any further questions. Thank you very much.