Westpac reports 32 per cent rise in first-half profit to $2.98 billion

Thursday May 6, 2010

Westpac Group interim profit results have been announced and report the banks financial success across several areas of the banks business.

One of the most remarkable results involves the banks increase of 32 per cent in first-half net profit, taking the final figure to $2.875 billion and cash earnings claiming 30 per cent to $2.98 billion.

Key financial highlights

• Statutory net profit of $2,875 million, up 32 per cent
• Cash earnings of $2,983 million, up 30 per cent
• Core earnings of $5,183 million, up 5% per cent
• Cash earnings per share of 100.8 cents, up 22 per cent
• Fully franked interim dividend of 65 cents, up 16 per cent
• Economic Profit of $1,836 million.

Chief executive Gail Kelly stated that the bank was pleased with the result, saying that it indicates a much improved Australian economy and shows strong momentum within the Westpac business.

"Overall, it is very clear The Westpac Group is emerging from the global financial crisis in a stronger position and with a sustainable platform for growth.''

"Our Institutional Bank and Wealth businesses have been particularly strong over the half. These businesses had been significantly impacted by the global financial crisis, and their rapid rebound reflects their underlying quality, coupled with disciplined, experienced management.

Westpac has stated that its results are indicative of the positive turning point in the Australian banking industry with positive movements on economic environment, asset quality and material reduction in impairment charges. The bank personally noted that it had strengthening across several of its own business portfolio areas including increased liquid assets, higher capital levels, a secure funding ratio and provisioning coverage ratios.

One of the biggest result highlights for the banking brand was its reported growth in mortgages, up 1.6 times banking system while its household deposit growth reported at 1.3 times banking system.

"Customer margins have been impacted by the increasing cost of wholesale funds at a time when we have been significantly increasing our market share. We have also secured a larger proportion of long-term funding which, while more expensive, provides certainty in supporting our customers," Mrs Kelly said.

"We are also making major investments in technology and banking operations. For example, significant progress has been made in the mortgage area, with processing times reduced by 40 per cent over the last 12 months."

As far as the future is concerned, the Westpac Group have stated that they will remain cautious, despite the improvement in both the Australian and New Zealand economies. Mrs Kelly said that the lasting effects of the Global Financial Crisis will continue for years to come, with global economies still showing hard effects.

"Indeed, recent issues in Europe have highlighted the fragile nature of the recovery in some global markets. In Australia we will continue to see impacts particularly over the next two years, as the transition towards new regulatory arrangements begins and the economy adjusts to post crisis credit costs.

"As a result we believe it is important to retain prudent balance sheet settings to deal with the challenges ahead."

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