Westpac profit meets expectations on home and business loans

[SYDNEY] Westpac Banking’s profit came in line with estimates as growth in mortgages and loans to businesses buoyed the Australian lender.

Net income dipped 1 per cent to A$6.9 billion (S$5.9 billion) in the 12 months ended Sep 30 from a year earlier, according to a statement on Monday (Nov 3). That compared with the A$6.9 billion average estimate of analysts surveyed by Bloomberg.

Chief executive officer Anthony Miller has reshuffled his senior management team to lift performance in areas such as its consumer business and has poached executives from rival lenders. Since taking the helm at Westpac in December, the former Goldman Sachs banker has cut jobs and refocused attempts to reduce costs and replace ageing tech systems.

“We have managed margins in a competitive environment and our capital position is strong, providing us with plenty of flexibility as we execute our strategy,” Miller said. “Australia remains well positioned in light of ongoing global disruption and economic uncertainty.”

The bank said that the cost of living pressure on households continues to ease and levels of business stress remain low.

“The majority of our customers have welcomed interest rate relief over the past year and this is helping fuel a modest recovery in private demand,” Miller said. “For businesses, we have seen improving conditions but continue to observe challenges for small business across materials, labour and energy costs.”

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The firm’s net interest margin dipped by one basis point to 1.94 per cent, while total loans grew 6 per cent to A$852 billion. Home lending expanded 5 per cent, while business and institutional lending grew 15 and 17 per cent, respectively.

Westpac said that it sold its Rams mortgage portfolio to a consortium that included KKR. Miller said that the sale further simplifies the bank. BLOOMBERG