Westpac in growth bid

By Richard Braddell


WELLINGTON - The best is yet to come with initiatives in place that will see profit growth across the Westpac group, says WestpacTrust chief executive Harry Price.

WestpacTrust yesterday reported a $332 million net profit for the September year, compared with $341 million last year, although Mr Price said the result would have been stronger but for higher bad debt provisions.

At the same time, the parent Westpac Banking Corporation reported a net profit of $A1.46 billion ($1.81 billion), up 8.5 per cent.

The recently issued Westpac NZ class shares, which are structured to mirror group performance, are likely to pay the recommended group dividend of 24Ac a share.

But in contrast to the parent shares, the dividend will be fully imputed and, at the present exchange rate, would provide a yield of 18 per cent.

Mr Price, who moves to Sydney in December as head of the group's NZ and Pacific regional banking, said growth in WestpacTrust's underlying profit had been disguised by a rise in bad debt provisioning from $24 million last year to $36 million, and lower profit from financial markets where greater stability had curbed trading opportunities.

However, completion of the Westpac/Trust Bank merger had enabled the group to focus on retail business opportunities which in the last quarter, according to research house IPAC, nudged it into top position ahead of BNZ in net inflow of managed funds.

With a rise of 400 per cent to $301 million for the year, WestpacTrust moved to top from 14th position last year.

Its insurance growth was also strong with sales up 47 per cent with about 30,000 new policies.

Mr Price said growth in funds management had been strong because the bank had been able to capitalise on many of its 1.2 million customers switching out of term deposits because of low returns.

The bank had trimmed operating expenses by $37 million but there was more to come now that Trust Bank had been assimilated.