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Westpac has announced a $1.5 billion share buyback despite its boss warning the Australian jobs market will be tested next year and that consumer sentiment remains weak, as the bank\u2019s profit jumped to $7.2 billion on the back of steady margins and loan growth.<\/p>\n
Chief executive Peter King said Westpac\u2019s balance sheet was the strongest he\u2019d seen in his 29 years at the bank, but that it would be a difficult year for the industry ahead.<\/p>\n
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Westpac chief executive Peter King said consumer sentiment remained weak but there were only modest increases in customer hardship.<\/span>Credit: <\/span>Oscar Colman<\/cite><\/p>\n \u201cThe second half of 2023 presented a more challenging environment for Westpac and the broader industry,\u201d he said. \u201cThis is expected to continue into 2024.\u201d<\/p>\n Westpac posted a net profit of $7.2 billion, up 26 per cent on the previous financial year. King said the result was built on the back of growth in deposits, mortgages and institutional banking.<\/p>\n The bank also announced a final dividend of 72 cents a share, taking the total dividend for the full year to 142 cents, up 14 per cent on the previous year.<\/p>\n King said Westpac would commence a $1.5 billion share buyback as the bank\u2019s credit quality remained resilient, and it exceeded regulatory capital and liquidity requirements.<\/p>\n While it had been a \u201cchallenging year\u201d for customers, King said hardship levels remained below COVID levels.<\/p>\n \u201cHouseholds have been squeezed by cost-of-living pressures and rising interest rates, meaning some have had to adjust their spending to keep up,\u201d he said. \u201cWe are not yet seeing significant increases in customers falling behind on repayments. But we remain focused on helping those who need it and encourage customers to call us early.\u201d<\/p>\n The bank said there was a \u201cmodest increase\u201d in mortgage portfolio delinquencies, institutional and banking loans, with credit impairment provisions \u2013 money set aside to cover loans that are unlikely to be paid back in full \u2013 of $4.9 million, up 7 per cent as a result of a weaker economic outlook.<\/p>\n Westpac\u2019s credit impairment charges were $648 million, or 9 basis points of average loans, compared to 5 basis points in the previous year.<\/p>\n Westpac grew its loan book by 5 per cent to $773 billion over the year, including a $23 billion increase in home loans and a $12 billion increase in business loans. Customer deposits increased by $28 billion.<\/p>\n The bank\u2019s net interest margin \u2013 which compares funding costs with what lenders charge for loans \u2013 increased 2 basis points to 1.95 per cent. This was partly driven by a wider deposit spread (the difference between interest rates charged to customers and the interest rate the bank pays) in the first half.<\/p>\n Westpac\u2019s operating expenses, excluding notable items, were up 1 per cent on the back of stronger wages, third-party vendor costs and higher software expenses.<\/p>\n Looking ahead, King said there were uncertainties in the economic outlook but that there were \u201cglimmers of hope.\u201d<\/p>\n \u201cWhile inflation is coming down, challenges remain, including volatile energy prices and geopolitical uncertainty due to conflict in Europe and the Middle East,\u201d he said. \u201cConsumer sentiment remains weak, but there are glimmers of hope with some cost pressures starting to ease for businesses, which in time should flow through to prices paid by consumers.\u201d<\/p>\nMost Viewed in Business<\/h2>\n
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