Westpac has joined rival ANZ in not paying an interim dividend to shareholders after revealing a massive slump in earnings for the six months to March 31.
Westpac also joined the ANZ in not following the NAB in launching a capital raising ($3 billion in the case of the NAB) from shareholders.
While the slump in earnings was expected after the bank revealed a series of one-off charges in mid-April and last week, the size of the vastly reduced profit was not disclosed until this morning.
Westpac said Statutory earnings fell 62% to $1.190 billion, but cash earnings, the figure the market is focused on, fell 70% to $993 million.
Westpac said the cash earnings figure was after one-off items totalling $2.278 billion (up 44%).
On top of that, there was an impairment charge (revealed last week) of $2.238 billion, including the previously announced $1.905 million for the costs associated with the COVID-19 pandemic.
The decision to defer the dividend leaves the NAB as the only March 31 balancing bank rewarding shareholders this half with a 30 cents a share payout.
ANZ and Westpac join the Bank of Queensland in deferring their interim payouts so far this year.
In a statement with the results, Westpac Group CEO, Mr. Peter King, said: “This is the most difficult result Westpac has seen in many years. It is significantly impacted by higher impairment charges due to COVID-19, as well as notable items including the AUSTRAC provision.
“Westpac’s balance sheet remains strong. Customer deposits were up $19 billion over the half, more than funding loan growth which increased by $5 billion. The deposit to loan ratio is now over 75 percent.
“We are well capitalised and our liquidity and funding metrics are comfortably above regulatory requirements.
“In light of the changed economic outlook we have increased Westpac’s provisions for expected credit losses to $5.8 billion, which includes approximately $1.6 billion of additional impairment charges predominantly related to COVID-19 impacts,” Mr. King said.
Westpac repeated that it has also provisioned $900 million for a potential penalty relating to the AUSTRAC civil proceedings brought against it on November 20 last year.
