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Westpac raked in $6.9 billion in profits last year as the banking giant widened its margins in the second half of the year, and its bottom line also benefited from low bad debt charges.
The bank on Monday also said it had sold the RAMS home loan business, which holds $21.4 billion in mortgages, to a consortium including non-bank lender Pepper Money, private equity giant KKR, and money manager PIMCO, for an undisclosed sum. Westpac shut down the RAMS business – which has faced legal action from the corporate watchdog – to new customers last year.
Westpac chief executive Anthony Miller said he was optimistic about the outlook for Australia’s economy.Credit: Oscar Colman
Westpac, the country’s second-biggest mortgage lender, on Monday reported net profit after tax fell 1 per cent in the year to September, to $6.9 billion, while it raised its final dividend by 1c to 77c.
The banking giant’s deposits grew by 7 per cent and total loans rose 6 per cent, while its business lending jumped 15 per cent as banks compete fiercely to lend to small and medium enterprises.
Net interest margins - which compare funding costs with what banks charge for loans - rose by 3 basis points in the September half compared with the same half last year.
Chief executive Anthony Miller, who started in role last December, said the fall in interest rates in the past year had fuelled a “modest” recovery in demand, though the RBA faced a delicate balance in managing rising unemployment and inflation.
Westpac said it had sold the RAMS home loan business, which holds $21.4 billion in mortgages, to a consortium including non-bank lender Pepper Money, private equity giant KKR, and money manager PIMCOCredit: Louie Douvis
“Australia remains well positioned in light of ongoing global disruption and economic uncertainty,” Miller said.
“The majority of our customers have welcomed interest rate relief over the past year and this is helping fuel a modest recovery in private demand. For businesses, we’ve seen improving conditions but continue to observe challenges for small business across materials, labour and energy costs.”
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Bad debts remained low, with charges for impaired loans falling to 5 basis points of its average loans, down from 7 basis points, as cost of living pressures eased.
The bank is going through a major technology overhaul and cutting costs in a bid to improve its returns, and Miller said this would remain a priority for the lender. “We remain focused on reducing our cost to income ratio over time, Miller said.
The bank had 35,263 full-time equivalent staff across the company, its annual report said, little changed from a year earlier.
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