Westpac announces Q1 profit rise of 33 per cent

Tuesday February 23, 2010

Westpac Banking Corporation has announced today that it has recorded a significant 33 per cent rise in its cash profit on lower impairment costs, climbing from $1.2 billion one year ago to $1.6 billion today.

Other results included:

• Customer margins declined by five basis points
• 1.7 per cent growth in lending, mainly from mortgages
• $21 billion raised in term funding with an the average term of the issuance rising to 4.8 years
• Higher average funding costs
• Stronger corporate loan book resulting in half as many asset-impairment charges, approximately
• $400 million from a twelve months prior
• Westpac shares declined 4.8 per cent since end-September
• This is compared to a 4.2 per cent fall for the benchmark index

Australia's third-biggest lender insists that they will remain cautious as the national and international economies continue to recover from the Global Financial Crisis which gripped the financial sector over recent years.

';';Although we remain cautious on the economic outlook, we believe that the worst of the crisis is now behind us and this is reflected in the significant fall in impairment charges,'' Chief executive Gail Kelly said in a statement.

';';Consumer asset quality remains strong although we expect a small increase in delinquencies throughout the year.''

The size of the profit recorded may not be the most welcome news to many of Westpac's customers after the banks previous actions have landed them in hot water, accused of trying to benefit from the 2009 Reserve Bank rate rises.

In December 2009 Westpac moved well beyond, almost double, the Reserve Bank of Australia modest interest rate rises and raised its own standard variable mortgages interest rates by 45 basis points. This was the highest recorded move by any of the big four banks which was quickly followed by a poorly received advertising campaign that compared customers to bananas.

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