Westpac hikes profit by 11pc

By KEVIN TAYLOR

Westpac Banking Corporation's net profit was up 11 per cent in the year to September - and its New Zealand division posted a 14 per cent profit rise.

Australia's Westpac yesterday announced a $A1.909 billion ($2.36 billion) net profit in the September year, up from $A1.715 billion the previous year.

This was despite bad debt charges blowing out by $A231 million to $A433 million during the year.

The result was at the top of analysts' expectations and the banking giant expects to deliver double-digit share earnings growth in 2002.

Chief executive Dr David Morgan said the group's strong performance showed the bank's low-risk strategy and customer focus were delivering value to shareholders and customers.

Directors intend declaring a final dividend of 32Ac a share, to be paid on December 21. This takes the total dividend for the year to 62Ac, fully franked.

Group revenue climbed 8 per cent and costs were contained, with the expense-to-income ratio falling to 51.5 per cent - a 3-percentage-point cut on the previous year.

The New Zealand division, WestpacTrust, reported a record net profit of $465 million, a 14 per cent rise from $408 million the last September year.

The bank contributes about a fifth of group profits.

WestpacTrust chief executive Tom Gallagher said increased loan volumes boosted profits and the result was good given the competitive financial services market.

Net interest income rose by $21 million (2.6 per cent) to $829 million, reflecting increased loan volumes to all customers - but led by business lending growth.

"Our focus on the small and medium business segment, particularly in regional areas, is reflected in our result," Mr Gallagher said.

Assets increased by more than $3 billion to $38 billion, and interest margins continued to fall - from 2.74 per cent to 2.55 per cent.

Mr Gallagher said that while there was still a lot of pressure on interest margins in a fiercely competitive market, the falling margins were welcome news for borrowers.

WestpacTrust also disclosed it had pared back personal banking fees by $1.1 million, noting that they now represented 6.7 per cent of operating profit.

Mr Gallagher said the new year would be more difficult because of the downturn that was happening in the US before September 11, and the uncertainty the terrorist attacks and their aftermath were causing.

"Where goes New Zealand Inc goes WestpacTrust - because of the size of the organisation relative to size of country."