(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.