Westpac annual profit down 7 per cent

Westpac's full-year annual group profit fell 7 per cent or A$567 million which the bank blamed on "a number of significant infrequent items".

Net group profit fell from A$8.01 billion for the year to September 30, 2015 to A$7.44b for the year to September 30, 2015, the accounts showed.

"The 7 per cent reduction reflected higher impairment charges in full year 2016 compared to full year 2015 and a number of significant infrequent items in full year 2015 which in aggregate added A$347m to net profit after tax which were not repeated in full year 2016," the bank said.

Westpac New Zealand's cash earnings decreased 4 per cent to $872m.

"Loans grew 9 per cent, however, intense competition for new lending and a shift to lower-spread fixed rate mortgages has compressed margins," the bank announced.

Weak financial conditions in the dairy sector drove stressed assets to tangible common equity up 94 basis points to 2.54 per cent, it said.

"Impairment charges increased $12 million as a result of the increased stress in the dairy portfolio and also from a lower level of write-backs and recoveries compared to the prior corresponding period," the bank said.

Westpac's New Zealand mortgage book grew 7 per cent to $45.1b, while business lending climbed 12 per cent to $28.4b, driven by credit growth in agriculture, energy and financial services. Deposits climbed 11 per cent to $57.5b.

In a presentation to investors, Westpac said its impaired dairy assets in New Zealand remain low, though there had been an increase in stress since a portfolio review at a milk price of $4.25 per kilogram of milk solids. The sector's total committed exposure had increased to $5.9b from $5.8b six months earlier, with a quarter of the portfolio 'stressed' compared to 10 per cent as at March 31 and 4.7 per cent a year earlier.

The dual-listed shares were unchanged at $31.20 on the NZX, and have dropped 13 per cent this year, while on the ASX the shares last traded at A$29.71.

- with BusinessDesk