Skip to Content
Global News Select

Westpac's 1st Half Profit Falls, Lifts Buyback — Update

By Alice Uribe


SYDNEY--Westpac said its first-half net profit fell by 16%, but it would return more capital to shareholders through an increased dividend and bigger share buyback.

The Australian bank said its net profit totaled 3.34 billion Australian dollars (US$2.21 billion) in the six months through March. Consensus forecasts compiled by FactSet projected Westpac's first-half profit would be A$3.44 billion.

Directors of the company declared an ordinary half-year dividend of A$0.75 per share, up from A$0.70 last year. On top of that, Westpac said it would pay a special dividend worth A$0.15 a share and raise its share buyback to A$2.5 billion, from A$1.5 billion.

Westpac chief executive Peter King said the lender's balance sheet was in good shape, allowing it to expand its share buyback and pay the special dividend.

"This half, we've managed growth and margins in a disciplined way amid a slowing economy and competitive banking sector," he said.

On credit quality, Westpac's CET1 level 2 capital ratio was 12.55%, which the lender said was 105 basis points above the operating range.

Westpac's total loans increased by 5% on year to A$784.8 billion in the first half, while total deposits rose by 4% on year to A$650.9 billion.

On a divisional basis, its consumer unit's first-half net profit fell by 32% compared to the same period last year, to A$1.08 billion. This was mainly due to price competition in mortgages, the lender said. Still, net loans for the first half rose by 5%, while deposits grew by 9%.

Australian lenders have benefited from the rising interest-rate environment over recent times. But competition to write new mortgages has crimped margins at the same time as lenders faced funding cost pressures. Investors have been keeping a close eye on the bank's credit quality, as customers grapple with higher mortgage repayments and inflation-related cost squeezes.

Still, Westpac on Monday signaled that competition on mortgage margins has moderated in the first half, with net profit in its consumer unit down by 3% on the second half of fiscal 2023.

The lender's net interest margin--the difference between the interest income generated and the amount of interest paid out to lenders--was 1.89%, some 7 basis points lower than the first half of fiscal 2023, and 5 bps lower than the second half of fiscal 2023.

In the lender's business and wealth division, first-half net profit rose by 7% to A$1.14 billion as operating income grew by 6% and underlying costs increased 5%. Net loans rose 3% with business lending growing by 5% driven by the commercial property and agribusiness sectors.

Overall, Westpac's operating expenses rose by 8% to A$5.40 billion compared the year before, which the lender attributed to higher software amortization expenses and inflationary pressures on wages and third-party vendor costs, noting that cost reset actions provided a partial offset.

Turning to the economic outlook, Westpac said it had seen an uptick in stress in its loan books, and although the Australian economy was proving resilient, a soft landing scenario wasn't certain.

"While inflation has fallen, getting it down to target range is proving difficult globally and here in Australia," King said. "It is likely interest rates will stay higher for longer."


Write to Alice Uribe at


(END) Dow Jones Newswires

May 05, 2024 18:34 ET (22:34 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

Market Updates

Sponsor Center