Westpac dividend cut as profit slips

WESTPAC has cut its dividend for the first time in a decade and moved to tap investors for $2.5 billion in fresh cash after posting a sharp drop in profit.

Chief executive Brian Hartzer has also missed out on millions in short-term bonuses as a sluggish economy and the cost of atoning for past misdeeds dents the bank’s bottom line. Net profit dropped 16 per cent to $6.78 billion for the year to September.

Cash earnings, a measure of underlying profit, were down 15 per cent to $6.85 billion. The nation’s second-largest lender, and owner of St George, BankSA and other entities, declared a fully-franked dividend of 80c, down from 94c in 2018.

The last time Westpac cut its dividend was in 2009 when the financial sector was reeling from the global financial crisis.

Mr Hartzer described 2019 as “a disappointing year”.

“Financial results are down significantly in a challenging low-growth, low interest rate environment,” he said.

Westpac is looking to raise $2 billion from institutional investors and $500 million from retail investors. The funds will help it meet regulatory capital requirements and expected litigation costs related to poor behaviour such as charging fees for no advice and overcharging loan interest.

Mr Hartzer took home $5 million in pay and perks for the year, down from $6.5 million in 2018. He was not awarded any short-term bonuses which could have potentially netted him $4 million.