Westpac heads for double digit growth

Westpac has experienced a 10.2 per cent rise in half year net profit it said today and confirmed it had reached agreement to sell its consumer finance business AGC to GE Capital for $1.65 billion.

Net profits climbed to $1.018 billion for the half year to the end of March, and the bank said it was on track for double digit earnings growth for 2002.

The sale of the AGC business comes about a week after Westpac bought Rothschild Australia Asset Management for $323 million.

Westpac expects to make a profit of at least $750 million on the AGC sale. Under the deal, Westpac will continue to sell AGC financial products to its business customers.

On the first half earnings result, Westpac chief executive David Morgan said the profit rise was achieved despite Westpac's bad debts from corporate collapses, including Enron and Pasminco, rising to $271 million from $176 million.

However bad debts were offset by strong revenue growth and benefits from cost cuts.

The first half profit result was largely driven by mortgage outstandings rising 12 per cent and a 15 per cent jump in credit card transactions. The bank's wealth management unit's operating profit rose 13 per cent to $114 million while business lending volumes rose four per cent.

Mr Chronican said the bank would consider making more acquisitions in the wealth management area, which he said was a priority focus for the bank.

Elsewhere, the bank's cost to income ratio fell to 49.4 per cent in the first half from 52.2 per cent in the same period a year ago as a result of the bank keeping a tight rein on costs.

At the same time staff numbers fell nine per cent to 26,704 as the bank continued to outsource some of its operations.

Westpac's net operating income rose seven per cent to $3.522 billion while net interest income rose six per cent to $2.16 billion.

Total non interest income rose nine per cent to $1.362 billion, driven by higher business transaction volumes in the bank's core Australian retail business. Lending fees rose nine per cent while transaction fees jumped 12 per cent.