Money Westpac profit rises 3 per cent to $8.06 billion

03:26  06 november  2017
03:26  06 november  2017 Source:   Sydney Morning Herald

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Westpac has notched up a full-year profit of $ 8 . 06 billion , as the country's second largest lender benefited from a slump in bad and doubtful debts. The bank on Monday reported the full-year cash profit , an increase of 3 per cent on last year

The institutional banking arm posted an 18 per cent lift in profit , to . 3 billion , helped by strong income from financial market trading, while its New Zealand bank delivered a 9 per cent rise , to A0 million. Westpac said it paid A million in pre-tax terms for the government's bank levy.

Brian Hartzer, chief executive of Westpac.© Andrew Meares Brian Hartzer, chief executive of Westpac. Westpac has notched up a full-year profit of $8.06 billion, as the country's second largest lender benefited from a slump in bad and doubtful debts.

The bank on Monday reported the full-year cash profit, an increase of 3 per cent on last year, as it also said it would keep its final dividend flat at 94c a share.

Net interest income was up 2 per cent during the year, a sign of the softer revenue backdrop facing the banks.

However, the bottom line was helped by a fall of 24 per cent, or $271 million, in its charges for bad and doubtful debts, while it also kept operating cost growth to 2 per cent.

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Westpac has credited a fall in bad loans and a rise in income across its Australian and international businesses for a 14 per cent increase in annual profit . Australia's second-biggest bank recorded net earnings of . 8 billion for the 12 months to the end of September.

Westpac Banking Corporation today reported an operating profit after tax and abnormals of New loan approvals rose to . 8 billion compared to .1 billion last year, with the total portfolio Exposure to properties in Australia amounts to $ 8 .6 billion of which .0 billion (1992: $ 8 .6 billion )

Chief executive Brian ​Hartzer said the global economic environment was improving, but domestically, policy uncertainty was stopping many businesses from investing.

"Whether it's on energy policy, transport infrastructure, or fixing up the tax arrangements between the states, Governments at all levels need to come together with business for a common purpose to provide the certainty that's needed to drive confidence."

In the housing market, he pointed to softer conditions over the year ahead, but said the number of its customers falling behind on their home loans was low by historical standards.

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Westpac Banking Corp. full-year earnings rose to a record as bad debts fell. Unaudited cash profit , which excludes one-time items, rose 3 percent to A$ 8 . 06 billion (.17 billion ) in the year ended Sept.

"We remain positive about the Australian housing market, although we expect price growth to moderate through 2018," Mr Hartzer said.

The bank's total loan growth was 3 per cent, driven mainly by the mortgage market which experienced 6 per cent growth.

Banks are being forced build up larger loss-absorbing capital buffers, and Westpac said its core equity tier 1 capital ratio was 10.6 per cent of assets, ahead of the 10.5 per cent minimum.

The result included $118 million the bank has spent on refunds or other "legacy" problems it was sought to resolve.

This included goodwill payments to life insurance customers whose claims were previously knocked back, and $65 million worth of refunds for discounts that had not been paid.

"Where we have found issues that we need to put right, we ensure that no customer has been disadvantaged from those past practices," Mr Hartzer said.

The bank's net interest margin – funding costs compared with what it charges for loans – was 2 basis points wider in the September half of the year, at 2.07 per cent.

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further increasing its stake to 8 .6 per cent .

On Wednesday, Westpac effectively pulled forward its full-year results due out on November 2, releasing unaudited full-year results for 2015 showing that its cash profit rose 3 per cent to .82 billion .

However for the full year, the net interest margin contracted by 4 basis points, to 2.1 per cent, which it said was because of higher funding costs and the impact of low interest rates.

The final dividend of 94c a share will be fully franked, and paid on December 22.

Its largest division in consumer banking posted a 4 per cent lift in profits, to $3.1 billion, while the business bank posted a 6 per cent increase, to $2.1 billion.

BT Financial Group's profits fell 11 per cent, to $771 million, because of "infrequent" items including customer refund payments and higher insurance claims caused by Cyclone Debbie.

The institutional banking arm posted an 18 per cent lift in profit, to $1.3 billion, helped by strong income from financial market trading, while its New Zealand bank delivered a 9 per cent rise, to $970 million.

Westpac said it paid $95 million in pre-tax terms for the government's bank levy. It said the tax would be paid from retained earnings, and it was equal to 2c a share.

During the year, Westpac has adjusted to the banking regulator's restrictions on interest-only loans during the year.

"Our primary goal in 2017 was to carefully balance growth and returns, while meeting all of our new macro-prudential regulatory requirements," Mr Hartzer said.

"We achieved the required macro-prudential targets for home lending. The credit quality of our loan portfolio is in great shape with stressed assets reducing during the year."

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