Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Invest

Westpac 1H profits soar post-pandemic

  • May 03 2021
  • Share

Invest

Westpac 1H profits soar post-pandemic

By Cameron Micallef
May 03 2021

Australia’s improving economic outlook has seen the profits of a big four bank surge, which is said to signal strong dividend gains across the market, an industry expert has revealed.

Westpac 1H profits soar post-pandemic

Westpac 1H profits soar post-pandemic

author image
  • May 03 2021
  • Share

Australia’s improving economic outlook has seen the profits of a big four bank surge, which is said to signal strong dividend gains across the market, an industry expert has revealed.

Westpac 1H profits soar post-pandemic

In a statement to the market on Monday, Westpac said its cash earnings had risen 256 per cent to $3.5 billion, in what chief executive Peter King called “a promising start to the year”.

The bank said it had recorded a net profit of $3.4 billion for the first half of the 2021 financial year, up 189 per cent on the prior corresponding period.

“First-half earnings were considerably higher than the prior corresponding period, mainly due to an impairment benefit reflecting improved asset quality and a better economic outlook,” Mr King said.

Advertisement
Advertisement

“Importantly, we are beginning to see the benefits of our new operating model through improved performance.”

The big four bank’s cash profits were heavily weighed down last year by provisions for bad loans due to the uncertainty surrounding the COVID-19 pandemic.

With an improving economic outlook the bank revised provisions seeing a surge in profits.

Mr King said the bank’s mortgage book had soared more than $2.6 billion over the past six months due to soaring demand in the property market.

“Owner-occupier loans increased 3 per cent [in the half], with first home buyers making up 13 per cent of new loans,” he said.

Mr King added that the bank still “remained prudent in our impairment positioning” despite the improved economic outlook for the Australian economy.

Following canceled dividend payments last year, Westpac will reward shareholder by paying a fully franked interim dividend of 58¢ a share on 25 June.

Plato’s senior portfolio manager, Dr Peter Gardner, said Westpac’s results and the imminent releases of its big four peers should signal a turning point for dividend investors.

“The half-year results from Westpac support the notion that Australian banks have navigated the COVID-19 crisis exceptionally well, and now we think their Australian investors, particularly the mums, dads and retirees, can breathe a sigh of relief,” Dr Gardner said.

He said the outlook for income investors looks remarkably bright, especially when you consider how things were looking just six months ago.

“While income from cash-backed assets continues to languish, fortunately, we are in the midst of a major turning point for dividend income, buoyed by the strong recovery of financials and also the continued strength of our major miners.

“We project the ASX 200 is on track to return around 5 per cent gross yield in the coming 12 months,” Dr Gardner concluded.

Westpac 1H profits soar post-pandemic
Westpac 1H profits soar post-pandemic
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

About the author

author image

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

more on this topic

more on this topic

More articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.