(8 May 2017 – Australia) Westpac has reported an interim cash profit grew by three percent, to A$4.02 billion.
It was spurred by an improvement from institutional bank returns and mortgage lending – however, the bank’s net interest margin contracted.
Domestically, Westpac’s business bank earnings rose to A$1 billion, an increase of three percent, while its retail arm grew cash earnings by five percent on the half to A$1.5 billion.
In its results for the half year to 31 March, Westpac said its net interest margins were affected by higher funding costs in the consumer and business bank.
The net interest margin is 7 basis points lower than 12 months ago after declining by 4 basis points in the first half due to competition for term deposits.
Westpac said costs were remained unchanged over the last six months and up one percent the year and it had found productivity savings during the period of A$118 million.
After a weak performance last year, Westpac said its institutional operation bounced back. It said as a result of improved credit quality, increased customer transactions, and a strong result from the markets business, cash earnings were up 34 percent on the half to A$700 million,.
Bad loan charges were recorded at just 15 basis points of loans, down 26 percent over a year to A$493 million. The number of loans more than 90 day due are “low by historical measures”, CEO Brian Hartzer said.
Return on equity was 14 percent, at the top end of the target range, and the CET1 capital ratio was 10 percent.