Economy

Westpac Banking FY17 Profit Rises; Says Confident About Outlook

Westpac Banking FY17 Profit Rises; Says Confident About Outlook”

However, the growth outlook will remain mixed across the country.

The bottom line was helped by a 24 percent fall in charges for bad and doubtful debts to Aus$853 million. "The only real lever to pull is costs".

Westpac's announcement comes after three of the Big Four banks announced their financial earnings for the year.

Big Four bank Westpac says it is in "excellent shape" after posting an after-tax profit of $7.99 billion, up seven percent from a year ago.

The Big Four banks have delivered an average 13.94 percent return on equity this reporting season, according to Ernst & Young.

Australia's "Big Four" banks are still earning record profits led by modest lending growth and a focus on costs but they are now starting to feel the impact of cracks in the property market, weak retail sales, heightened competition and an increased regulatory burden.

Still, stagnant wage growth and high levels of underemployment are keeping a lid on economic growth and in turn demand for credit, with growth expected to slow to mid-single digits, he said.

For FY17 Westpac reported a statutory net profit of $7.99 billion, up 7 per cent, and cash earnings of $8.06 billion, up 3 per cent.

Westpac's stressed assets are now at a near five-year low of 1.05 percent, and any lift in impairments will further erode profits. House price growth may slow but few are tipping big falls, which suggests that home loans will continue to be a victor even with stricter lending criteria as a result of regulation.

Chief executive Brian Hartzer said Westpac had managed to grow its loan book, while ensuring it stayed within regulatory limits on investor and interest-only lending. He added business customers were holding back on investing because of uncertainty about government policy on issues from taxes, to energy and transportation infrastructure.

Commonwealth Bank, Westpac, ANZ and National Australia Bank made a combined total of $31.5 million in profits in the 2017 financial year, up 6.4 per cent on 2016.

At the start of the month, Australia & New Zealand Banking Group Ltd. CEO Shayne Elliott warned the environment for revenue growth is expected to remain constrained in 2018 by intense competition and the effect of regulation, including the Australian bank tax.



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