BT helps drive solid Westpac quarter

BT Financial Group has emerged as a significant contributor to a solid first quarter for Westpac.

The company told the Australian Securities Exchange today that cash earnings were up 5 per cent over the last two quarters of 2010 averaging $1.47 billion, as a result of improved operating income, slightly lower expenses and continuing improvement in impairment charges.

But the banking group said the result was lower than the $1.6 billion cash earnings reported for the first quarter of last year, which had been boosted by high Treasury and Market earnings.

Looking at divisional performances, the bank said that BT Financial Group had continued its solid performance, capturing a significant portion of system funds under administration flows over the quarter with continuing strong growth in BT Super for Life customers.

However, it said this had been partially offset by a rise in insurance claims associated with the recent natural disasters in Queensland and elsewhere.

Commenting on the result, Westpac chief executive Gail Kelly (pictured) said the operating environment was positive, but that recent natural disasters and subdued consumer sentiment were likely to see businesses remaining cautious.

The banking group said the initial impact of the Queensland floods for Westpac was around $50 million in pre-tax earnings for the first quarter.

Westpac stated that as the impact of the December quarter floods was more fully assessed — combined with the impact of the Brisbane floods, Victorian floods and cyclone Yasi — insurance claims were expected to increase.

The bank said the additional claims cost would be mitigated by the Group’s conservative reinsurance arrangements and were estimated to be an additional $30 million in the second quarter.