Westpac (WBC) this morning joined the ANZ in lifting interim profit and dividend for the six months to March 31.
Westpac said cash earnings rose 8% to $3.772 billion in the six months ended March 31 and that its first-half statutory net profit rose 10% to $3.622 billion.
Revenue rose 7% to $3.9 billion in the half year period.
The interim dividend was boosted to 90 cents a share, up 4 cents a share or 5%.
So what will Westpac shares do today when trading starts today? Will they follow the lead from the ANZ and slide (the old buy on the rumour sell on the fact), or did the fall last week shake the profit hungry traders out of the stock?
Westpac shares dropped 2.7% to $34.87 (the NAB lost a nasty 4%) last week. The ANZ did best of those three with a fall of ‘only’ 1.7%.
“Our balance sheet is strong and we have sector-leading positions in capital, credit quality and in productivity,” chief executive Gail Kelly said in this morning’s statement.
“Over the past six months, we have provided more than $41 billion in new lending to Australian retail and business customers.
“We are pleased to continue to provide strong returns directly to our approximately 585,000 shareholders. Today’s dividend represents a payout ratio of 74%, demonstrating our commitment to return a high portion of earnings to our owners,” Ms Kelly said in this morning’s statement.
Westpac said its cash return on equity (ROE) of 16.5%, up 43 basis points (The ANZ’s was stable on 15.5%).
Like the ANZ, its net interest margin (NIM) fell under the pressure of intense competition for deposits and home lending, especially in New Zealand.
The bank said its NIM was 2.11% (0r 2.11 cents in every dollar of revenue), a fall of 8 basis points (0.8 of a cent in every dollar of income). Despite that fall, the bank said its net interest income rose 4% to $6,677 million, thanks to a 7% rise in average interest-earning assets which offset the fall in the NIM.
WBC 1Y – The bank profit and payout bonanza continues
Australian housing loans grew 5%. Personal lending rose by 21%, and business lending increased by 5%, including the contribution from the Lloyds acquisition. Group-wide, customer deposits increased $29 billion to $389 billion, up 8%.
The group’s expense to income ratio of 41.2%, "which is sector leading," according to the bank.
Non-interest income of $3,182 million, up 9% increase, driven largely by the wealth business.
"Impairment charges were $97 million lower, consistent with the Group’s high quality portfolio. Economic overlays were slightly higher. Stressed assets have continued to decrease and the incidence of new impaired facilities has also declined," Westpac said.
Westpac said a breakdown on its profit showed that the Retail and Business Bank generated cash earnings of $1,251 million, up 10%, St.George Banking Group delivered cash earnings of $772 million, up 12%, Westpac Institutional Bank delivered cash earnings of $752 million, down $33 million or 4%, BT Financial Group lifted cash profit 21% to $438 million, and Westpac New Zealand delivered a 17% increase in cash earnings, to NZ$432 million.
WBC 1H14 Result: Good numbers, lower bad debts
