Australia: Shares fall as sour loans mar Westpac profit growth

[MELBOURNE] Australia and New Zealand shares fell on Monday, hauled down by heavyweight banks after no.3 lender Westpac Banking Corp delivered a weaker-than-expected half year profit due to a rise in sour loans.

The S&P/ASX 200 index was down 40.52 points, or 0.8 per cent, at 5,211.90 by 0301 GMT.

New Zealand shares were down 28.01 ppoints, or 0.4 per cent, at 6,792.57.

Westpac was the biggest loser in both markets, as it kicked off bank reporting season on a disappointing note.

Its shares dropped as much as 5.7 per cent to a three-week low after it reported a 3 per cent rise in first-half cash profit, which missed forecasts as bad debt charges rose.

The rest of the big four banks all fell more than 3 per cent, ahead of first-half results from Australia and New Zealand Banking Group on Tuesday and National Australia Bank on Thursday.

Virgin Australia Holdings fell 2.9 per cent after flagging it expects to report a pre-tax loss in the current half and would cut capacity due to weak consumer demand, the mining slump and uncertainty around a federal election.

Wagering group Tabcorp Holdings slid more than 3 per cent to a one-month low after its third quarter wagering and media revenue rose just 0.5 per cent, well below growth in turnover, as its customers had big wins betting on horse races.

Defying market gloom, top telecommunications company Telstra Corp jumped 2 per cent after saying it would hand back at least A$1.5 billion (S$1.53 billion) to shareholders, from the sale of most of its stake in Chinese car sales web site Autohome Inc.

Struggling law firm Slater & Gordon leapt as much as 131 per cent, its biggest gain in nine years, after its lenders agreed to restructure its debt, giving it two years to improve its performance before the closest loan deadline.

Z Energy fell 0.89 per cent as investors took profits after the petrol retailer jumped 11.2 per cent to a record high on Friday on the news that regulators had allowed the company's acquisition of Chevron New Zealand.

Air New Zealand led gains, bouncing back after six sessions of losses as investors began to consider the stock might have been oversold and ahead of the company's investor roadshow on Tuesday.

REUTERS