Westpac profit unchanged in first-half at $3.6 billion

Westpac Group today announced a First Half 2015 net profit of $3.6 billion which is unchanged from the same period last year.

While Westpac’s first-half cash earnings were also reported as unchanged from a year ago at $3.78 billion, competitor the Commonwealth Bank is set to reach an annual profit of a record $9 billion.

In the first profit result under Chief Executive Officer Brian Hartzer, the bank said its retail and business banking divisions were performing relatively well, attributing the flat result in cash earnings to an $85 million charge relating to derivative adjustments in the Westpac Institutional Bank business, and a lower Treasury contribution.

Prior to the derivative adjustments, cash earnings were up by 2%, in comparison to the corresponding period last year.

“Our primary goal is to continue to build the value of our franchise, and the drivers of value are heading in heading in the right direction. We have grown our customer base and continued to improve customer service, while maintaining our disciplined approach to growth and margin management,” said Hartzer.

The bank reported an increase in housing loans by 7% with home loan growth remaining slightly below the average of its competitors. Groupwide, customer deposits have also increased by 8% to $420.3 billion.

Despite the lack of profit growth, Westpac is also raising its fully-franked interim dividend by 1c from the previous half to 93c a share. However, this is a smaller increase compared to past decisions to increase dividends by at least 2c in every half since late 2009, according to SMH.  

Although Hartzer said he was maintaining a positive outlook about the growth of the Australian economy with record low interest rates, a low Aussie dollar and support from the housing sector, he expects this growth to be “uneven across different industry sectors and geographies.”

“Areas like housing, infrastructure, and agriculture will do relatively well, while other areas such as mining and resource-driven regions and adjacent service providers will find it tough.”