Westpac CEO said the bank is "in good shape"
Westpac Bank has reported a decrease in its net profit after tax (NPAT) of 16% to $3.34 billion for the first half of 2024.
In a recent ASX announcement, Westpac CEO Peter King (pictured above) warned about a slowing economy and heightened competition in the banking industry.
The bank said that excluding notable items, its NPAT was down 1% for this half and 8% from the prior period.
However, the bank said it remains “focused” on improving service, saying it has seen benefits from its investment over the years. The Westpac app is rated the best in Australia, reducing mortgage and business lending approval times while upgrading merchant payment services for its business customers.
Westpac’s balance sheet is “in good shape,” supporting a “special dividend of 15 cents per share fully franked and an increase in the buyback program of $1 billion to $2.5 billion,” the bank said.
According to King, the interim dividend is 75 cents per share fully franked, which is a 7% increase on the 2023 interim dividend.
King expressed optimism about the bank’s outlook and said he is “confident” that the company will continue to deliver for its customers.
In terms of segment performance, Westpac’s business and wealth segment reported an NPAT increase of 7% to $1.14 million.
Meanwhile, its net loans rose 3%, with bank lending growing 5% driven by the commercial property and agribusiness sectors.
Its institutional bank segment’s net profit declined 3% to $689 million. In this segment, the pre-provision profit increased 7%, which Westpac says, reflects “well managed margins and loan growth of 10%.”
The bank’s consumer segment also saw a 32% NPAT decrease to $1.08 million, while operating income declined 12%, primarily because of price competition in mortgages.
Compared to 1H23, the net interest margin (NIM) went down 7bps to 1.89%.
Meanwhile, the impact of competition on mortgage margins moderated this half and NIM excluding notable items was unchanged compared to the second half of last year.
King noted that the uptick in stress in Westpac’s loan books was expected because of the “large increase” in interest rates, high inflation, and taxation.
“We remain appropriately provisioned and with a strong balance sheet are in a good position to help customers,” King said.
He also noted that unemployment remains low, based on historical measures, amid slowing economic growth, saying the Australian economy is “proving resilient.”
King also said that the scenario is uncertain, adding that it is difficult to get inflation down to target range, as is the situation globally and in Australia.
“Despite the uncertain economic outlook, I remain of the view that Australia is one of the better places to be,” he said.
“Westpac is in a good position. We’re firmly focused on our customers and continuing our contribution to the nation’s economic wellbeing.”
