Sunday, August 14

Bumper year for Australian banks as Westpac profit up

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SYDNEY: Australian banking giant Westpac posted a 14 per cent jump in full-year net profit with all core divisions performing well, capping a bumper year for the country’s major lenders.

The result in the 12 months to September 30 came in at A$6.82 billion (US$6.44 billion), compared with A$5.97 billion the previous year.

Cash earnings – the measure more closely watched by analysts, which strips out volatile items – were up eight per cent at A$7.10 billion, in line with expectations, although its share price closed 1.22 per cent lower at A$34.16 in a weak market.

The solid result follows a record annual profit last week for ANZ Bank, up 11 per cent to A$6.3 billion, and a 33.6 per cent jump to A$5.45 billion for National Australia Bank.

With the nation’s biggest lender, the Commonwealth Bank of Australia, posting an eight per cent rise in its annual result to a record A$7.68 billion in August, their collective profits soared to some A$27 billion for 2013, despite a slowing economy.

It makes Australia’s banking sector one of the world’s most successful, benefiting from falling bad debts and cost-cutting.

“It’s apparent that on many measures the Australian banking sector is among one of the world’s most successful,” PwC Australia banking analyst Stuart Scoular said.

“They seem well placed to maintain that mantle for a good while yet, provided of course that Australia can maintain its enviable record of economic growth.”

Westpac, the country’s second largest bank by market capitalisation, said all of its operations contributed higher revenue and earnings amid stronger demand for home loans, improving asset quality and solid growth in customer deposits.

“I am very pleased with our 2013 result. It demonstrates strength, consistency, careful balancing of growth and return, and disciplined execution of our strategy,” chief executive Gail Kelly said.

“I am particularly pleased that all of our operating divisions and brands contributed positively to the result.

It demonstrates the quality of the performance, with cash and core earnings up across the board.” The company announced a final dividend of 88 cents and a special dividend of 10 cents, taking its annual payout to shareholders to A$1.74 per share, joining the other big banks in boosting rewards for investors.

While Kelly said the bank would continue to operate cautiously due to global uncertainty and a slowdown in mining investment impacting the Australian economy, she indicated a recent improvement in consumer confidence boded well for the next 12 months.

“There is no doubt that domestically we are seeing a pick-up in consumer confidence which we expect will translate to a gradual increase in credit growth,” she said.

“The spring season is already seeing momentum accelerate, and our portfolio of brands is well positioned to benefit from this.

“Equally encouraging is the recent improvement in business confidence, which is central to businesses being willing to borrow and invest.” — AFP