Westpac has reported a solid net profit in the face of continuing market volatility, registering a 12 per cent increase to $3,859 million, with cash earnings increasing 6 per cent to $3,726 million.
The bank attributed the result to strong loan and deposit growth from all Australian customer segments, but at the same time acknowledged there had been an increase in impairment charges to $931 million, with institutional impairment charges rising by $201 million.
Looking at the various bank divisions, Westpac chief executive Gail Kelly said the Consumer Financial Services group had reported solid cash earnings growth driven by strong growth in mortgages in deposits, while Business Financial Services had recorded strong growth in cash earnings with lending growing by 17 per cent.
Kelly said the Westpac Institutional Bank had delivered sound performance with revenue growth of 13 per cent, while BT Financial Group had been impacted by steep falls in investment markets.
Dealing specifically with BT, the chief executive said that despite reporting solid inflows, overall funds under management and funds under administration were lower, investment markets had delivered lower return and general insurance claims had been above expectations.
Looking into the future, Kelly acknowledged the recent actions of governments and regulators to restore confidence in the financial system, but suggested that the initiatives were unlikely to avert a more severe and prolonged slowdown in global growth.
She said that given these conditions, lower loan growth in the year ahead was anticipated as consumers and businesses sought to strengthen their balance sheets in the tougher operating environment.
“Impairment charges are also expected to continue to rise as unemployment moves modestly higher,” she said.
Looking at the forthcoming merger with St George, the bank said the transaction complemented its broader strategy by enhancing Westpac’s distribution capabilities and by providing shareholders and customers with a stronger financial institution.
St George yesterday reported a record annual profit.
