Westpac Rounds Out Disappointing Profit Season With Flat Result

(Bloomberg) -- Westpac Banking Corp. posted earnings that slightly missed expectations, rounding out a disappointing earnings season for Australia’s big commercial banks.

• Cash profit at Australia’s second-biggest bank was A$8.07 billion ($5.8 billion) in the 12 months ended Sept. 30, the lender said Monday. That was little changed from last year, and just below analyst estimates of A$8.14 billion.

Key Insights

• Commonwealth Bank of Australia, National Australia Bank Ltd. and Australia & New Zealand Banking Group Ltd. all reported declining cash profits, as the slowing housing market and spiraling customer compensation costs took a toll. Westpac CEO Brian Hartzer said it had been “a difficult year.”
• In a sign of how tough banks are doing it, return on equity -- a key measure of profitability -- plunged 77 basis points to 13 percent, the weakest in at least a decade.
• The outlook for housing is also bleak, with Hartzer saying property prices will cool further and investor demand remain weak. Westpac is pulling back from the once-highly profitable investor market, with interest-only loans falling to 35 percent of the bank’s mortgage book from 50 percent in March 2017.
• Westpac is the only one of the big four not in the throes of an extensive restructure. While its rivals are all offloading their wealth units, the Sydney-based lender says it intends to keep its advisory business despite the prospect of tougher regulation in the wake of a series of industry scandals.

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• For more details on the results, click here

To contact the reporter on this story: Emily Cadman in Sydney at ecadman2@bloomberg.net

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Peter Vercoe, Edward Johnson

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