Westpac in the money
By Phil Boeyen, ShareChat Business News Editor
Westpac Banking Corp has lifted its interim profit by 10% with its New Zealand subsidiary WestpacTrust (NZSE: WPT) also reporting an improved first half.
The Australian-based bank says after tax profit at the end of March rose to A$1.02 billion, with core earnings up 14% to $1.78 billion and earnings per share up 10% to A54.8 cents.
The company's New Zealand arm, WestpacTrust, has reported a 7% increase in profit to $231 million.
WestpacTrust chief, Tom Gallagher, says activity levels over the last six months are the best the bank has ever seen and are a direct result of aligning its business to better meet customers' needs.
"This has allowed WestpacTrust to improve its result despite operating in a highly competitive environment where margin pressure has been intense."
Mr Gallagher says interest margins have declined from 2.56% in the equivalent period last year to 2.48% in the current period while non-interest income increased by 6%, reflecting the bank's continued success in insurance sales and retail funds inflows.
"WestpacTrust retained its number one position for the net retail managed funds inflows for the six months and captured 64% of the market in the December quarter. This demonstrates WestpacTrust's commitment to supporting our customers' wealth management needs and increased focus on this area."
WestpacTrust says non-interest expenses increased by only 2%, reflecting the continued focus on costs. The bank's expense to income ratio of 48% is 1% lower than the prior year period.
The bank says online banking continues to grow, with the number of registered users doubling over the last year to 177,000. It also reports that a joint venture with The Warehouse (NZSE: WHS), The Warehouse Financial Services Ltd, was profitable in its first half-year reporting period.
Chief executive of the Australian parent company, David Morgan, says the interim result was underpinned by revenue growth and the company is well positioned to meet its aspirations of continued double-digit earnings growth.
Dr Morgan says the Australian economy has continued to perform well over the last six months and the strength has been lead by continuing buoyancy of consumer confidence and resultant retail demand and residential construction activity.
"From this base, the economy is well positioned to benefit from the emerging global recovery and should see Australia and New Zealand continue to enjoy solid growth for the remainder of the financial year."
The company has also confirmed the sale of AGC, its consumer finance business in Australia and New Zealand, to GE Capital for A$1.65 billion and expects to make a minimum profit on the sale of A$750 million.
"The price reflects the full value of the business to Westpac and will enable us to focus our efforts on those higher growth components of our business that are central to our strategy," says Dr Morgan.
In New Zealand, GE Capital has agreed to purchase most of AGC's assets. WestpacTrust will retain a small asset portfolio, including AGC MasterCard, and all of the liabilities, including Retail Debentures.
Westpac will pay an interim dividend of A34 cents per share.
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