Costs may rise faster than revenues for the second year in a row at Westpac next year, as the bank soldiers on with an array of projects designed to strip out expenses and underpin a lift in product sales. Most of the payoff may not flow through until 2013 or later, the bank's management said yesterday.One surprise in the bank's full-year financials, released yesterday, was Westpac's version of what bank chiefs like to refer to as the "jaws", a graph of changes in revenue and costs. The ideal jaws graph has the revenue line rising and costs declining. At Westpac in 2011, the jaws are closed. Operating income increased one per cent and expenses increased two per cent, and the bank's chief executive and chief financial officer were obliged to devote much of their investor briefing to explaining this trend, and the numerous investment projects designed to counter it.The context to the Westpac costs story is the abundance of projects ahead of the bank, even as it declares that the work arising from the three-year takeover of St George Bank is now "complete".Thirteen months ago, Westpac introduced the internal jargon "strategic investment priorities" to describe 14 streams of work. Westpac's CEO, Gail Kelly, said yesterday that six were complete and eight still in progress. Of those eight, the bank aims to complete three in 2012, two in 2013 and three more in 2014 or later.The eight are:-- a new testing system for other IT projects; -- a new teller system that the bank will adopt for its contact centres; -- a new customer information management system; -- a revamped payments' platform and switch; -- further consolidation of data centres;-- improved security at those centres;-- improvements to a mobile payments' platform that will be introduced with limited functionality next year, and -- an overhaul of the mortgage processing arrangements that were a dog's breakfast even before Westpac bought RAMS in 2007, and then St George in 2008, and are now even more unpalatable.Kelly adopted a positive tone in her presentation of the investment priorities, noting that we are "almost halfway through with six of our 14 SIPS", and asserting that "we are fundamentally in so much better a place than we were three years ago."Kelly said that "three years ago we were in a very poor position" but the "enormous focus and effort that has gone into this area has driven a significant reduction in the average number of severity-one incidents".She said these fell from an average of 34 per month in 2008 to six per month in 2011, across Westpac and St George.The timing of spending on the investment projects, which was weighted toward the last few months of the 2011 year, helps explain the flat cash earnings at Westpac in the second half, which slid one per cent to A$3.1 billion.Phil Coffey, Westpac's chief financial officer, said that restructuring costs also picked up over the second half. The bank also met the bill for what it terms "distribution" investments,