Westpac reports earnings of A$1.55 billion
(16 February – Australia) Westpac Banking Corporation has posted unaudited first quarter cash earnings of approximately A$1.55 billion, down from A$1.6 billion in the previous corresponding period.
Australia's second biggest lender said the first quarter result was a five percent increase on the average cash earnings of the third and fourth quarters of fiscal 2010.
Westpac's operating income in the three months to December 31 grew two percent over the preceding two quarters, and the net interest margin increased three basis points to 2.2 percent.
Morningstar analyst David Ellis said further margin growth was likely in the remainder of fiscal 2011.
'With the home loan re-pricing in November, that will obviously help further,' he said.
'Also pressure on term deposit spreads seems to be easing a little bit, and the large increase in customer deposits has eased the pressure on their wholesale funding requirement for 2011.'
Westpac grew customer deposits by A$8 billion in the quarter, with growth across all segments.
Wholesale funding costs are still rising, but like Westpac's competitors, they were stabilising, Mrs Kelly said as she forecast lower costs by 2013.
'Looking forward to 2012, we may start to see some stabilisation there,' she said.
'Obviously we've got a big chunk of maturities coming through that we put on in 2009, and clearly we are hoping to replace that with cheaper funds at that time.
'I'm really looking forward to something like 2013 and 2014, because we've got the five-year money that we put in in 2009 and that rolls off, and that was very expensive money at the time.
'Then you'll see quite a significant reduction in costs and it will be great to pass some of that benefit on to customers.'
Westpac's operating income in the three months to December 31 grew two percent over the preceding two quarters, and the net interest margin increased three basis points to 2.2 percent.
Morningstar analyst David Ellis said further margin growth was likely in the remainder of fiscal 2011.
'With the home loan re-pricing in November, that will obviously help further,' he said.
'Also pressure on term deposit spreads seems to be easing a little bit, and the large increase in customer deposits has eased the pressure on their wholesale funding requirement for 2011.'
Westpac grew customer deposits by A$8 billion in the quarter, with growth across all segments.
Wholesale funding costs are still rising, but like Westpac's competitors, they were stabilising, Mrs Kelly said as she forecast lower costs by 2013.
'Looking forward to 2012, we may start to see some stabilisation there,' she said.
'Obviously we've got a big chunk of maturities coming through that we put on in 2009, and clearly we are hoping to replace that with cheaper funds at that time.
'I'm really looking forward to something like 2013 and 2014, because we've got the five-year money that we put in in 2009 and that rolls off, and that was very expensive money at the time.
'Then you'll see quite a significant reduction in costs and it will be great to pass some of that benefit on to customers.'
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