West­pac Bank profit slides 7%

The Myanmar Times - - International Business -

AUS­TRALIAN bank­ing gi­ant West­pac posted a 7 per­cent slide in an­nual net profit yes­ter­day on the back of mar­ket head­winds and im­pair­ment charges but said it was well po­si­tioned with a strong bal­ance sheet.

West­pac’s A$7.45 bil­lion (US$5.72 bil­lion) re­sult in the year to Septem­ber 30 rounded out an­nual re­port­ing from three of the na­tion’s big four lenders, with all bat­tling reg­u­la­tory changes and ris­ing bad loans.

Cash profit at the na­tion’s sec­ond largest bank, the mea­sure more closely watched by an­a­lysts which strips out volatile items, was flat at A$7.82 bil­lion, in line with ex­pec­ta­tions.

De­spite ris­ing bank fund­ing costs and tougher cap­i­tal rules, it paid a div­i­dend of 94 cents, in line with what share­hold­ers re­ceived in the first half of the year.

But in an ac­knowl­edge­ment of cur­rent mar­ket con­di­tions, chief ex­ec­u­tive Brian Hartzer said the bank would trim its re­turn on eq­uity tar­get down from 15pc to 13 or 14pc in the medium term.

“We are con­tin­u­ing to de­liver our ser­vice-led strat­egy, in­creas­ing cus­tomer num­bers, de­liv­er­ing worldlead­ing dig­i­tal ser­vices, and sup­port­ing more cus­tomer needs,” Mr Hartzer said.

“At the same time we have strength­ened our bal­ance sheet, care­fully man­aged mar­gins, and achieved A$263 mil­lion in pro­duc­tiv­ity sav­ings, while in­creas­ing our in­vest­ment in dig­i­tal and other ser­vice ini­tia­tives.

“The re­sult demon­strates our con­sis­tent ap­proach to man­ag­ing our core fran­chise over many years, in­clud­ing the dis­ci­pline we ap­ply to bal­anc­ing growth and re­turns.”

The bank saw a A$371 mil­lion, 49pc, rise in im­pair­ment ex­penses com­pared to the previous pe­riod, which hurt net profit.

But Mr Hartzer said West­pac was well funded mov­ing for­ward, hav­ing raised around A$3.5 bil­lion through an en­ti­tle­ment of­fer dur­ing the year.

“Our healthy cap­i­tal level po­si­tions the group well for any fur­ther reg­u­la­tory changes, while en­sur­ing we can con­tinue to sup­port eco­nomic growth in Aus­tralia,” he said.

West­pac was the last of the big banks to report in the cur­rent cy­cle.

ANZ last week posted a 24pc drop in net prof­its to A$5.7 bil­lion on the back of re­struc­tur­ing costs as it puts more em­pha­sis on Aus­tralia and New Zealand and less on Asia.

The week be­fore, Na­tional Aus­tralia Bank’s net profit dropped 94.4pc due to write­downs, in­clud­ing of Bri­tish as­set Cly­des­dale. But its cash profit rose 4.2pc to a bet­terthan-ex­pected A$6.48 bil­lion.

Aus­tralia’s largest bank, the Com­mon­wealth, op­er­ates on a dif­fer­ent re­port­ing sched­ule. –

Photo: AFP

West­pac chief ex­ec­u­tive of­fi­cer Brian Hartzer speaks at a me­dia briefing in Syd­ney yes­ter­day.

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