On Thursday (3 February) morning, Westpac revealed a net profit of $1.82 billion in the quarter ended 31 December, up 80 per cent on the quarterly average for the second half of 2021.
Cash earnings stood at $1.58 billion, up 1 per cent excluding notable items, but the net interest margin declined 8 basis points to 1.91 per cent.
Over the first quarter, total loans increased 0.7 per cent with growth across Australian mortgages, institutional lending and New Zealand lending.
“We have made a sound start to the year and we are seeing the cost benefits of our simplification programs. The environment however remains highly competitive, and we continue to see pressure on margins,” Westpac chief financial officer Michael Rowland said.
“Given this, we are bringing forward our simplification plans and changing our operating structure to improve efficiency and move more of our people closer to the customers they support.”
Key management changes
In a separate ASX listing, Westpac announced changes to its operating structure, flagging the management reshuffle as a key part of its three-year plan to reduce its cost base to $8 billion by 2024.
“We are building a simpler bank, streamlining our organisation and lowering the cost of running the group,” said the bank’s chief executive Peter King.
During the past quarter, Westpac reduced its headcount by more than 1,100, a mix of third-party contractors and staff.
On Thursday, the bank announced a restructure of its top ranks, most notably the merger of the chief risk officer (CRO) and group executive for financial crime, compliance and conduct.
As such, it was announced, both CRO David Stephen and current group executive for financial crime, compliance and conduct Les Vance would leave the bank.
Instead, Ryan Zanin will take over as Westpac’s chief risk officer, joining the big four from the Federal National Mortgage Association (Fannie Mae) in New York, where he is executive vice-president and chief risk officer.
“Ryan Zanin will build on the work underway, as we continue to drive our risk transformation. I’m pleased we will have someone of Ryan’s calibre joining Westpac,” Mr King said.
Two new divisions will also be created to “drive further efficiency and productivity”, including corporate services which combine property, procurement, HR, finance services, corporate affairs and community, and sustainability, headed by current group executive for customer and corporate relations Carolyn McCann.
The second division – customer services and technology – headed by current chief operating officer Scott Collary, will be responsible for functions that support customers.
Westpac noted it expects to incur a small restructuring charge with its first-half 2022 results, while further charges are said to be reflected in the annual statement.
