Westpac Banking Corporation beat forecasts with a 9 percent rise in second-half profit, helped by strong fund management performance, and said business momentum was strong this year.
Westpac, Australia's best performing major banking stock in 2007, did not give a specific profit outlook for the current year but said it was confident of delivering solid growth in a robust domestic economy, while demand for credit was expected to remain high.
Westpac said it had no exposure to the distressed U.S. subprime mortage market, but added that funding costs had risen due to a global credit market squeeze which could possibly have some short-term impact on the bank. As a precaution, Westpac made A$28 million in additional provisions to reflect global market volatility.
The bank also seized an opportunity that arose from the global turmoil, buying the brand and distribution business of battered non-bank lender RAMS Home Loans Group Ltd last month as the credit troubles choked off RAMS's funding.
"We are very excited about the RAMS acquisition and we believe that the distribution assets are of real strategic interest and gives us additional distribution fire power. That deal is proceeding very well," - Westpac's outgoing Chief Executive Officer David Morgan told reporters.
Westpac shares were up 2 percent at A$31.16 by 0412 GMT, after hitting an all-time high of A$31.31 earlier in the day. Westpac, Australia's oldest bank, reported a cash profit of A$1.829 billion ($1.7 billion) for April-September, up from A$1.678 billion from a year ago. Six analysts on average had projected profit of A$1.778 billion. Full-year cash profit rose 14 percent to a record A$3.507 billion as revenue grew 11 percent.
Cash earnings, effectively the core profit, exclude one-off items and non-cash accounting items, and form the basis for dividends payable to shareholders.
Australian banks are benefiting from 16 straight years of economic growth while three-decade low unemployment has kept bad debt in check, but increased competition from non-bank lenders and foreign banks such as ING and HBOS Plc is increasing costs.
Westpac announced in August that Gail Kelly, former chief executive of St George Bank Ltd, would replace Morgan, who has been at the helm since March 1999. Westpac's wealth management division, BT Financial Group, was its strongest performer, with a 23 percent rise in cash earnings for the full year.
[132] 01.11.2007 Source: Reuters
Popular News
French Bank to Repay Government Bailout - 14.10.2009 Crédit Agricole, the French bank, said Wednesday that it would repay the €3 billion of debt the government bought last December, becoming the latest big bank to pay back a bailout. Source: New York Times
Card fraud in the UK falls by 23% - 08.10.2009 The amount of money being lost through card fraud fell by 23% in the first half of the year in the UK, as criminals changed their strategies and prevention measures began to take effect, according to figures published today. Source: Guardian.co.uk
The trend: large banks will acquire smaller banks - 18.09.2009 KBW Inc., the New York-based boutique that advises financial institutions, expects 500 to 1,000 U.S. banks to fail by 2011, Chief Executive Officer John Duffy said. Source: Bloomberg
Colonial Banc Group declares bankruptcy - 15.08.2009 Colonial became the largest US bank to fail this year after it was declared bankrupt and had the bulk of its assets taken over by rival BB&T, the government banking insurer said Friday. Source: Agence France-Presse
Fighting economic crisis in U.K. - 27.07.2009 Current economic difficulties in U.K. were caused by global financial crises and have resulted into the following changes in the country's economy in 2007-2008: Source: BanksDaily.com
The European Central Bank injects €442 billion into banking system - 25.06.2009 The European Central Bank (ECB) allotted €442 billion to banks for 12 months, the biggest amount it has ever given in a single auction. The amount was more than most economists had expected. Source: RTTNews
Westpac said it had no exposure to the distressed U.S. subprime mortage market, but added that funding costs had risen due to a global credit market squeeze which could possibly have some short-term impact on the bank. As a precaution, Westpac made A$28 million in additional provisions to reflect global market volatility.