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Westpac earnings soar in first quarter results
Westpac has reported a strong start to the year, with cash earnings soaring due to improving economic conditions and credit quality.
Westpac earnings soar in first quarter results
Westpac has reported a strong start to the year, with cash earnings soaring due to improving economic conditions and credit quality.
Westpac’s profits have bounced back, with cash earnings rising 54 per cent to $1.97 billion due to higher margins, lower expenses and an improved economic climate, with the mortgage growth predicted to continue throughout 2021.
In a trading update on 17 February, Westpac said its earnings had benefited from lower bad debt charges, wider margins and lower expenses due to short-term changes in its investment spending.
Core net earnings, excluding notable items, climbed 28 per cent to $2.4 billion in the three months ended 31 December.
December quarter’s unaudited statutory net profit printed at $1.70 billion, more than double the second half quarterly average of $550 million.
“Our first quarter 2021 result was higher than the second half 2020 average, mainly from an impairment benefit reflecting both improved credit quality and a much improved economic outlook,” said Westpac chief executive Peter King.
“I am particularly proud that our focus on supporting customers has contributed to a high proportion of customers being able to manage the impacts of COVID-19 and return to repayments.”
The report showed Westpac has lifted its economic outlook for 2021, lowering its provisions for doubtful debts as the economy continues to emerge from the COVID-19 pandemic.
Loan deferrals continued to decline, with $11 billion of Australian mortgage deferrals at 31 January and “significant roll-off” expected in February and March. Less than 1 per cent ($400 million) of small-business portfolio remains in deferral.
“While uncertainty remains around the impact of local COVID outbreaks, there is cause for optimism. The economy is recovering, consumer and business confidence is strong, and the labour market has been much more resilient than expected. At the end of December, there were 12.9 million employed Australians compared to 13 million in March 2020,” Mr King continued.
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