Westpac bank lifts dividend, will start A$1.5 billion buyback
WESTPAC Banking lifted its dividend and said it will buy back A$1.5 billion (S$1.32 million) of its own shares as strength in mortgages buoyed profit.
Net income rose 26 per cent to A$7.2 billion in the 12 months ended Sep 30 from a year earlier, according to a statement on Monday (Nov 6). That missed the A$7.3 billion estimate of analysts in a Bloomberg survey.
Australian banks are now getting less of a tailwind from higher interest rates as market pricing indicates hikes may be nearing an end. Investors are assessing how big a hit net interest margins are taking and the extent of success with plans to rein in expenses.
“Consumer sentiment remains weak but there are glimmers of hope with some cost pressures starting to ease for businesses, which in time should flow through to prices paid by consumers,” chief executive officer Peter King said. “We’re broadly positive about the economic outlook over the next year and Westpac is in a strong position to grow its business and support customers who need help.”
Westpac will pay a final dividend of 72 Australian cents per share.
King also reflected on the strength he sees in his firm’s capital position and position in home loans.
“A strong banking sector is vital for a resilient economy and Westpac’s balance sheet is the strongest I’ve seen in my 29 years at the bank,” King said. “Margins increased two basis points and have been well managed through a period of intense mortgage competition.”
King also said progress continues to be made in bringing down costs, part of the bank’s long-term efforts to simplify the lender’s operations.
“Our expenses are down 1 per cent but we recognise there’s more work to do as we seek to lower our cost-to-income ratio relative to peers,” he said. “Impairment provisions have increased to position the bank’s balance sheet appropriately for the uncertain economic outlook.” BLOOMBERG
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