BT back in economic black
By Michael Bailey
The memory of BT Financial Group’s horror years of the early 21st century continue to fade, as the unit delivered a big increase in funds under administration and a return to economic profit in the six months to March.
BT’s economic profit, which refers to operating profit minus the opportunity costs of its achievement, was $31 million up from a loss of $7 million in the previous half, and contributed to a record Westpac operating profit after tax of $1.325 billion for the half year.
Cost reductions as a result of the BT/Westpac/Sagitta integration delivered $13 million over the period, and BT claimed it was on track to deliver total integration “synergies” of $116 million, well up on the $65 million originally forecast.
The synergies came despite an increase in staff costs and a major print advertising campaign, but a BT spokesperson refused to reveal the precise source of the continuing savings.
BT Financial Group’s operating profit before tax of $162 million, up from $119 million in the preceding six months, was driven by revenue growth derived from improved funds management performance, with BT claiming all of its flagship funds are now top quartile performers over the past two years. For example, the Australian equities team outperformed its benchmark by 3.6 per cent in the year to March 31.
Wrap growth of 43 per cent helped BT’s funds under administration rise a whopping 48 per cent over the period, while funds under management across the retail and institutional businesses grew 6 per cent to $40 billion.
Margin lending income grew 19 per cent with a book growth of $344 million, while life insurance income was up 8 per cent.
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