Westpac posts $297m half year profit

Marco Green
May 5, 2020

The bank's impairment charges lifted to $211 million in the half, from $14m.

Westpac New Zealand chief executive David McLean says in the last half year reporting period, Covid-19's effects had only just started being felt - but it had a significant impact.

The bank last week announced a $1.6 billion impairment for potential loan defaults due to the COVID-19 related shutdown and has also provisioned $900 million for a potential penalty related to AUSTRAC proceedings.

"Our entire outlook changed in the space of a couple of weeks as the country went into lockdown".

In April, Westpac said it would write down more than A$3.67 billion (S$3.35 billion) in its first-half results, with most of the charges stemming from the economic deterioration expected from the coronavirus outbreak. This half-year result reflects only the early impacts of Covid-19, and our initial assessment of the lending losses we're likely to see as a result.

Last week, National Australia Bank Ltd. launched a A$3.5 billion capital raising, while also slashing its interim dividend by 64% to 30 Australian cents per share in response to upheaval caused by the coronavirus pandemic.

It comes as Westpac and the country's other major banks have been asked by financial watchdog the Australian Prudential Regulation Authority to "seriously consider" suspending their decisions on dividend payments until there is more certainty about how Covid-19 will impact the economy.

"Westpac NZ has both the financial strength and the commitment to New Zealand to help support the economy to recover".

"Interest rates remain at all-time lows, which will help soften the impact on borrowers whose incomes have been reduced, and wage subsidies and mortgage deferrals give households and businesses time to regroup", he said.

Its interest rate margin, effectively a measure of its profitability fell to 2.06 percent from 2.23.

The scheme was tweaked on Friday as the Government announced direct interest free loans to small businesses amid concerns banks were not doing enough to lend to small businesses. ANZ delayed its decision on whether to pay an interim dividend until there is more clarity on the pandemic's economic impact.

On Monday, Westpac also said it would review whether underperforming businesses such as wealth platforms, retirement products, insurance, and auto finance businesses would be more successful under different ownership.

"We are well capitalised and our liquidity and funding metrics are comfortably above regulatory requirements".

Other reports by Click Lancashire

Discuss This Article

FOLLOW OUR NEWSPAPER