Westpac post lukewarm Q3 results
(7 November 2017 – Australia) Westpac posted a three percent rise in annual cash profit and a drop in profitability in the third quarter.
The bank recorded cash profit of A$8.06 billion for the year ended 30 September, up from A$7.82 billion in 2016.
Westpac’s net interest margin, a barometer of profitability, dropped by four basis points to 2.06 percent, as competition eroded the benefits of an industry-wide move in July to increase mortgage rates.
“The positive signs of resources services and infrastructure will support growth ... (but) with household incomes flat and rising energy costs it’s hard to see consumer spending rising strongly,” Westpac Chief Executive Brian Hartzer told reporters.
The bank’s stressed assets are now at a near five-year low of 1.05 percent, and any lift in impairments will further erode profits.
UBS analysts said a nine percent fall in non-interest income was worrying, noting that the bank’s “growth is predicated on reduced funding costs and provision charges remaining very low”.
Westpac’s common equity Tier-1 capital ratio rose to 10.6 percent at end-September from 9.5 percent a year ago.
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