An unimpressive full year result from Westpac (WBC) as it suffered a blow out in dud loans in the year to September 30.
The country’s second biggest lender resisted following the ANZ and cutting its dividend, choosing to keep faith with shareholders.
The bank reported a flat cash profit of $7.822 billion compared to 2014-15, on a 3% slide in revenue to $20.9 billion (it had been up 5% at the half mark of March 31).
Instead it followed its peers the CBA and NAB in maintaining payout, Westpac leaving the payout at 94 cents a share, after lifting the interim by one cent to 94 cents a share. That left the full year payout at $1.88 a share – up one cent from 2014-15 because of the higher interim.
Westpac said statutory net profit fell 7% to $7.445 billion.
Bad loans surged 49% to $1.124 billion. The bank says cash earnings growth was little changed due to this higher impairment charge, mostly for a small number of larger companies in the first half of the year. Impaired loans were up 16% to $753 million at the half way mark.
CEO Brian Hartzer says Westpac’s consistent focus on Australia and New Zealand means its high quality portfolio is strongly positioned.
He says housing credit growth is likely to ease a little as price growth slows. Business credit growth is likely to improve moderately as it rebounds off a low base.
“The financial services industry continues to experience significant regulatory change,” he said. Return on equity fell again – by 1.85 percentage points to a still very high 14.0%.
Investor Snapshot:(WBC) FY16 results video
