Westpac Profit Up 12%

Westpac released their full year results today. Headline was a 12% uplift in statutory net profit, to $7,561 million for the 12 months to 30 September 2014, compared with 2013 results of $6,751 million. Continued focus on the Australian market is clearly paying off. “While all divisions performed well, Australian Financial Services (AFS) has had a particularly strong year. All businesses in AFS delivered double digit earnings growth, with well managed margins and a 6% increase in banking customer numbers. We provided more than $87 billion in new lending to Australian retail and business customers over the year, while growing in line or above system across all key markets in the second half.”

Looking at cash profit, WBC recorded $7.63 billion, an 8 per cent increase on the previous year and slightly ahead of analyst estimates at $7.62bn.

The Group grew at or above system in all key markets in the second half of 2014, including growing at system in Australian mortgages, 1.3x system in household deposits and 1.4x system in business lending.

Net interest income was $13,496 million, up 5%, with an 8% rise in average interest-earning assets and a 7bps decrease in net interest margin to 2.08%. The full year decline in net interest margin principally reflects a lower Treasury contribution, higher levels of liquid assets and lower interest rates impacting returns on capital.

Non-interest income was $6,324 million, a 7% increase, driven largely by another strong performance from the Australian wealth and insurance business, BT Financial Group.

WBC reported an expense to income ratio of 41.6%, which is sector leading; and a further decline in impairment charges which were 23% or $197 million lower.

WBC will pay a fully franked final dividend of 92c to shareholders on the register at November 12. Westpac’s total distribution for the year is$1.82, a 5 per cent lift on the previous year.

We note their continued focus on customer centricity, and the emerging digital strategy, both of which position well for future performance.

Author: Martin North

Martin North is the Principal of Digital Finance Analytics

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