Westpac Bank profit slides 7%
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. –
Westpac chief executive officer Brian Hartzer speaks at a media briefing in Sydney yesterday.