Westpac result defies tough times

Westpac Banking Corporation has defied the market volatility to post a 34 per cent increase in net profit after tax to $2.2 billion for the six months ending March 31 on the back of a 10 per cent increase in cash earnings to just over $1.8 billion.

The result sees the bank deliver investors a fully franked interim dividend of 70 cents, with Westpac chief executive Gail Kelly claiming the outcome demonstrated that the company was managing the current market volatility well.

The only gloomy element in the Westpac result appeared to be the performance of the BT Financial Group, which reported a 10 per cent decline in earnings, prompting the bank to state that it had been impacted by difficult investment markets and that its wrap platform continued to perform strongly.

Commenting on the outlook over the remainder of the year, the bank said tighter conditions in global capital markets would continue to dominate the near-term outlook for the financial services sector, with higher funding costs and slower system growth expected.

“Despite these conditions, the Australian economy remains sound,” Kelly said. “However, we expect the higher interest rate environment will contribute to a dampening of economic growth through the remainder of 2008.”

She said Westpac expected the sector to have slower loan growth, higher impairment charges in both consumer and business segments, continuing market volatility and continuing higher funding costs.