(2 May 2016 – Australia) Australia's third biggest lender, Westpac Banking Corp (WBC), has reported a 3 percent rise in first-half cash profit.
Cash earnings rose to A$3.9 billion for the six months ended March 31 compared with A$3.78 billion a year ago. Low interest rates drove a growth in mortgage lending, which in turn assisted the bank’s earnings.
The result is slightly softer than expected, with WBC also reporting that it was impacted by more bad loans in its institutional lending arm.
The bank said its institutional lending business was hit by “significantly higher” impairment charges because of four major customers, which added $252 million to its bad debt charge.
In a statement, chief executive Brian Hartzer said WBC had “recorded sound balance sheet growth” and would continue to “focus on controlling costs and delivering sustainable returns”.
“There have been a few pockets of stress, mostly related to lower commodity prices, and an increase in provisions for a small number of larger exposures, which contributed to a rise in impairment charges,” he added.
“While there have been a small number of large firms experiencing difficulties during the first half, these have been predominantly due to company specific issues that have been, in some cases, exacerbated by the mining cycle,” he said.
“We expect some increase in consumer delinquencies over the second half, but this is likely to be concentrated in segments and sectors that are more reliant on the resources industry.”