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Australia's Westpac H1 profit up 6 %, beats forecast

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Westpac Banking Corp said on Monday its half-year cash profit rose 6 per cent, boosted particularly by its consumer and corporate lending arms.

[BENGALURU] Westpac Banking Corp said on Monday its half-year cash profit rose 6 per cent, boosted particularly by its consumer and corporate lending arms.

Australia's No. 2 lender reported a cash profit of A$4.25 billion (S$4.26 billion) for the half year ended March 31, up from A$4.02 billion a year ago. That beat the A$4.17 billion estimate, according to four respondents polled by Reuters.

Cash profit, a measure that excludes one-offs and non-cash accounting items, is closely watched by investors.

Net interest income rose 8 percent to A$8.30 billion, while net interest margin - a barometer of profitability - was up 11 basis points to 2.16 per cent.

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Westpac's consumer banking arm saw a 12 per cent rise in cash earnings to A$1.72 billion, helped by controlled costs and lower impairment charges.

Westpac had raised mortgage rates across a range of products including for owner occupiers last year, a move in line with the country's regulators trying to rein in a raging property market.

Most of Westpac's big bank peers had also implemented similar strategies. The Australian banking watchdog then set new rules for higher capital on the country's largest banks, while steering clear from any measures to cap their bloating mortgage books.

"Our businesses continue to perform solidly, with the results for the Consumer and Business banks particularly good. All businesses increased core earnings over the prior half," Chief Executive Brian Hartzer said in a statement.

Last month, Australia's banking regulator said it would remove a cap on lending to property investors as high-risk lending had now moderated and there had been an improvement in lending standards.

Australia has seen a surge in property prices in recent years, while income growth is tepid.

Westpac's common equity Tier-1 capital ratio at March-end rose to 10.5 per cent from 10 per cent a year ago.

Westpac announced an interim dividend of A$0.94 per share, the same as last year.

The lender added that operating expenses increased by A$50 million during the period, which included costs associated with the Royal Commission inquiry into the Australian financial sector for misconduct.

REUTERS