Chief executive Brian Hartzer said the group had delivered a sound result despite significant regulatory change with increased customers numbers and a tighter control on costs. Telstra Corp shares may rise after it said it would return at least A$1.5 billion ($1.1 billion) to shareholders by December on top of its annual dividend, using cash from the sale of most of its stake in China’s Autohome Inc.
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Group cash earnings were $A3.9 billion, also up 3% for the six months ended March 31, with growth slowed by higher impairment charges, mostly from additional provisions raised for a small number of larger customers coming under increased stress, the Australian company said in a statement.
The nation’s oldest bank declared an interim dividend of 94 cents a share, unchanged from the final dividend of 2015.
Australia’s second biggest bank Westpac has nearly doubled its impairment charges for bad loans, hitting its first-half profit bottom line.
However, Mr Hartzer said overall credit quality remained sound.
Cash profit, the bank’s preferred measure that strips out one-off items, rose 3 per cent to $3.9 billion, down on the consensus forecast of $4.1 billion.
Fairfax reported that Macquarie analyst Victor German said the charges for bad loans were higher than expected and Westpac’s share price was likely to underperform after the result. Lending increased $2.6b or 4 per cent from the previous half and 7 per cent on a year ago.
“We expect some increase in consumer delinquencies over the second half, but this is likely to be concentrated in segments and sectors that are more reliant on the resources industry”.
At 1201 AEST, the benchmark S&P/ASX200 index was down 56.6 points, or 1.08 per cent, at 5,195.6 points.
Westpac’s New Zealand agricultural portfolio totals $A8.6 billion, up $A1 million on the previous half and accounting for 7.9% of the bank’s TCE.
On Wall Street on Friday, the Dow Jones Industrial Average fell 57.12 points, or 0.32 per cent, to 17,773.64 points as company earnings reports continued to weigh on the market.
Mr Hartzer said despite the mixed global economic conditions he remained positive about Australia’s prospects.
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“The recent firming of commodity prices, solid employment growth – particularly in the services sector – and ongoing low interest rates support that outlook”.
