Friday 8th August 2008
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Cash earnings will rise 6% to 8%in the year ending Sept. 30, the Sydney-based bank said in a statement. Revenue will rise as much as 9%, outpacing growth in expenses of up to 7%, it said.
Westpac's "conservative risk profile" means it hasn't faced the big write-downs in securities portfolios its rivals have made, chief executive Gail Kelly said. The bank "has a strong capital and funding position, allowing us to effectively respond to the more difficult operating environment."
National Australia Bank (NAB) last month announced provisions for collateralised debt obligations (CDOs) exposed to the U.S. home mortgage market would exceed A$1 billion this year. Australia & New Zealand Banking Group Ltd. said full-year profit may drop as much as 25% because of increased provisioning for bad debts.
CDOs accounted for the biggest portion of the US$453 billion of asset writedowns and credit losses at the world's biggest banks since the start of 2007, Bloomberg News reported in July 22.
Westpac stock has dropped 17% this year, better than NAB's 33% decline and ANZ Bank's 36% slide. Westpac rose 1.4% to A$23.47 today.
To be sure, Westpac said it is beginning to see a slowdown in loan growth, according to notes for a presentation today. Bad debt provisions will probably rise in the second half and wealth earnings have been "significantly impacted by declines in markets."
In New Zealand, lending rose 1.8% in the company's third quarter, or an annualized rate of 7%, down from 12% in the first half.
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