A thumbs down from the market for the full year profit, higher dividend and special payment from Westpac (WBC).
The shares fell 1.2% (but are still up around 30% for the year so far) to $34.16, or a loss of 42c.
The reason? Investors quickly realised that much of the 8% rise in cash earnings to $7.097 billion came (like the NAB) from a sharp fall in its bad and doubtful debt provision.
The same fate befell the NAB after its full year result last Thursday as its shares dropped after the announcement.
Full-year statutory net profit increased 14% to $6.816 billion, from $6.036 billion in the previous year.
Revenue rose 4% to $18.883 billion, from $18.076 billion.
The group will pay a final dividend of 88c, fully-franked, as well as a special dividend of 10c, also fully-franked.
That took full year dividends to $1.74, up 5%, plus the 20c in special dividends.
The bank revealed a 10c a share interim special dividend.
WBC YTD – Westpac profit, dividend fails to impress market
Westpac’s profit took the total of the big four bank profits for 2012-13 to $27.4 billion.
The Commonwealth Bank earned the most with $7.811 billion, Westpac earned $7.097 billion, the ANZ earned $6.5 billion and the NAB earned $5.94 billion.
Westpac CEO Gail Kelly said yesterday the bank believed higher confidence would lead to increased borrowing by consumers, especially those in NSW.
"There is no doubt that domestically we are seeing a pick-up in consumer confidence which we expect will translate to a gradual increase in credit growth," Mrs Kelly said in yesterday’s statement.
"The spring season is already seeing momentum accelerate, and our portfolio of brands is well positioned to benefit from this."
In its Australian Financial Services division, which includes its retail bank St George, and BT funds management arm, cash earnings were up 12% to $4.48 billion.
The institutional banking division posted an 11% lift in profits to $1.64 billion, while Westpac New Zealand’s earnings jumped 16% to $634 million.
Net interest income rose by a moderate pace of 3%, the bank kept operating expenses flat over the year and its cost to income ratio eased to a low 40.9%, which is the lowest for the big four.
But the charges for impaired loans fell by 30%, or $365 million.
Westpac’s cash profit was up $6.598 billion in 2011-12 and investors saw the fall in the bad and doubtful debts charge as driving most of the half a billion rise in cash earnings during the year.
