Westpac slashes headcount in $8b cost-cutting effort

westpac bank big four bank

3 February 2022
| By Laura Dew |
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Westpac has reduced headcount by more than 1,000 people in the past quarter as it streamlines the business in order to reduce costs by $8 billion by 2024.

In an announcement to the Australian Securities Exchange (ASX) of its financial results for the three months to 31 December, the Big Four bank said headcount had reduced by more than 1,100. This came from a mix of third-party contractors and staff.

This was likely to be just the beginning as the bank said it expected to make changes across head office and support functions to reduce the size of corporate functions by around 20%.

The three-year plan would reduce the cost base to $8 billion by 2024 and involve moving support services including HR, finance and technology, the creation of two shared service areas to achieve benefits of scale across common processes and a lean group head office responsible for setting strategy, policy and frameworks.

Westpac chief executive, Peter King, said: “We are building a simpler bank, streamlining our organisation and lowering the cost of running the group. This is key to delivering better service for customers and better results for shareholders.

“The changes are primarily across head office and support functions and not customer-facing roles.”

The headcount reduction contribution to a $191 million decline in expenses to $2.7 billion.

Looking at the firm’s financial results, the firm announced a statutory net profit of $1.82 billion for the quarter. Cash earnings were $1.58 billion, up 1% on the same period a year ago, excluding notable items, which the firm said reflected lower expenses and a strong contribution from Treasury and markets. It was partially offset by lower net interest margins, a turnaround in impairment charges and the absence of revenue from business sold, particularly insurance.

Westpac chief financial officer, Michael Rowland, said: “We have made a sound start to the year and we are seeing the cost benefits of our simplification programs. The environment, however, remains highly competitive and we continue to see pressure on margins.

“Given this, we are bringing forward our simplification plans and changing our operating structure to improve efficiency and move more of our people closer to the customers they support.”

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