Westpac’s profit climbs on economic recovery

Bloomberg

Westpac Banking Corp’s half-year profit climbed as a continued recovery in the nation’s economy drove a further reduction in pandemic loan-loss provisions at Australia’s second-largest lender.
Cash earnings rise to A$3.5 billion ($2.7 billion) in the six months through March 31, compared with A$993 million in the same period a year earlier, the Sydney-based bank said in a statement. That beat the A$3.4 billion average estimate of three analysts surveyed by Bloomberg. The firm will pay a 58 Australian cent interim dividend.
Westpac is the first bank Down Under to update investors this earnings season amid a V-shaped rebound in the economy that’s allowing lenders to wind back bad-debt provisions faster than initially expected. Chief Executive Officer Peter King is helming the firm’s sharper focus on core banking and
efforts to drive down costs.
“Most significantly, unemployment is falling and there are more people employed now than pre-Covid,” King said in the statement. “A strong labor market will continue to support growth in the economy.”
The firm’s mortgage book for Australia grew by A$2.6 billion over the six months as an expansion in owner-occupier loans offset lower lending to investors. King warned that house-price growth will moderate as more homes come on the market for sale.
Westpac will target an A$8 billion cost base by the full year of 2024, according to the statement. Meantime, the lender continued to reduce its branch network, shutting 40 in the first half of the year.
These are “solid results overall,” Goldman Sachs Group Inc. analysts led by Andrew Lyons, wrote in a report.