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Westpac Posts $1.6bn 1Q profit

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The Westpac Group reported first quarter cash earnings of approximately A$1.6bn (NZ$2.04bn), driven by reduced impairments and good momentum across all businesses, in what it says is a clear sign of an improving environment.

Westpac Group Chief Executive, Gail Kelly, said that although the group remains cautious on the economic outlook “we believe that the worst of the crisis is now behind us” and that the fall in impairment charges reflects this.

Kelly said consumer asset quality remains strong “although we expect a small increase in delinquencies throughout the year”.

Kelly said customer margins declined by 5bps in the first quarter, driven by an increase in the average cost of funds. “Fee income was lower following the group's decision to reduce exception fees for consumer and business customers.”  

The merger with St. George Bank has seen above system growth in lending and deposits, and improved Net Promoter Score results, now well above the major bank average. Approval to move to a single ADI is now also largely complete and Basel II advanced accreditation is expected by the middle of the year. 

The Westpac Group was active in funding markets in 1Q10, supporting continued asset growth. “Westpac has raised A$21bn of term funding in the first quarter, with the average tenor of new term issuance in the quarter extending to 4.8 years,” said Kelly. “Given continuing high funding costs and the lengthening of the group's funding profile, average funding costs continue to rise.”  

She said while the Australian economy continues to improve, uncertainties and risks remain in the global environment.    

 


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