Geelong Advertiser

Westpac profit misses forecast

- STUART CONDIE

WESTPAC lifted full-year profit 3 per cent to $8.062 billion, narrowly missing market expectatio­ns after it copped the cost of past mistakes.

The lender said yesterday cash profit for the 12 months to September 30 rose from $7.822 billion a year ago, falling short of the $8.152 billion analyst consensus.

Non-interest income appeared to be the culprit, falling 9 per cent due to lower markets income and a $118 million provision for refunds and other payments to customers.

Westpac took a hit equivalent to 1.5 per cent of its cash profit to superannua­tion customers who lost out because of disclosure practices, package customers who did not receive benefits to which they were entitled and others who did not receive on-time advice.

Chief executive Brian Hartzer said the bank had made changes to ensure there would be no repeat.

“Where we have found issues that we need to put right, we ensure that no customer has been disadvanta­ged from those past practices,” Mr Hartzer said.

Chief financial officer Peter King said it was looking at whether more customers were due refunds, but that most had likely been resolved.

“We’ve dealt with the things we know at the moment, so there’s nothing that we’ve got out there,” Mr King said.

“We’ve got through the biggest part of it.”

UBS analysts said the weakness in non-interest income was concerning, while Citi noted surprising­ly soft fees and commission­s in markets.

The bank held its final dividend unchanged at 94 cents for a fully franked full-year payout of $1.88 per security, with Mr Hartzer suggesting the flat return was due to the $66 million post-tax impact of the Federal Government’s bank levy, which took effect this year.

“That’s two cents per share that wasn’t available to be paid out to shareholde­rs or to invest in customers or our people,” he said.

The consumer division lifted earnings 4 per cent, boosted by 6 per cent growth in Australian mortgages — a market in which Westpac has a 23 per cent share.

Net interest margin improved three percentage points to 2.10 per cent over the second half but is likely to come under pressure as customers switch from intereston­ly mortgages to lower rate principal and interest loans.

Westpac lifted its capital reserves, boosting its common equity tier one capital ratio to 10.6 per cent and comfortabl­y beating the January 2020 deadline to meet the Australian Prudential Regulation Authority’s 10.5 per cent “unquestion­ably strong” benchmark.

Mr King said future additional capital could be returned to shareholde­rs.

“If we’ve got good productivi­ty opportunit­ies, we could go after those; if we’re seeing better balance sheet growth, we’ll support that,” he said. “If we don’t, we can give it back to shareholde­rs.”

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