Westpac profit misses estimates as CEO flags Middle East risks

[MELBOURNE] Westpac Banking’s first-half profit missed expectations as CEO Anthony Miller flagged worries about the impact of the Middle East war on customers.

Net income rose 3 per cent to A$3.4 billion (S$3.1 billion) in the six months to Mar 31 from a year earlier, according to a statement on Tuesday (May 5). That compared with the A$3.5 billion average estimate of analysts polled by Bloomberg.

Australia’s biggest lenders are getting a boost from higher interest rates. Still, Miller has warned that a deteriorating economic outlook stemming from the Middle East conflict could tip Australia into a recession and the Sydney-based bank has increased provisions.

“The war in the Middle East is presenting challenges for some customers and the economic impact of the conflict will continue through the year,” Miller said in the statement. “The disruption to energy supply chains has driven a rise in prices and we are seeing this flow through to businesses and households.”

Rival National Australia Bank on Monday missed first-half profit estimates as higher software costs and revenue challenges offset robust loan growth. ANZ Group Holdings last week posted better-than-expected results.

Westpac’s home loans grew at 1.2 times the broader market, according to the statement. Deposits in its business and wealth division rose 5 per cent, driven by growth in transactional and savings balances. The firm said that it remains focused on growing transactional accounts, with the number of new accounts up 33 per cent.

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“While our customers are resilient and stress levels have declined, we have taken a prudent approach and increased our provisions,” Miller said.

Westpac’s economic outlook now reflects its base case provision scenario and a new portfolio overlay was added for energy intensive sectors. Credit impairment provisions increased to A$5.2 billion. BLOOMBERG