Westpac Banking Corporation Ltd has recently reported a 16% decrease in first-half profits, while also delivering significant capital returns in the form of special and interim dividends. CEO Peter King has assured stakeholders that the bank has a stable balance sheet and is making progress in its business operations to mitigate the impact of economic uncertainty.
Furthermore, the bank has expanded its buyback programme to $2.5 billion, demonstrating its dedication to providing returns to shareholders. Despite these positive financial developments, CEO Peter King has expressed caution regarding the economic outlook and indicated that interest rates may not be reduced until 2025, contrary to forecasts made by the bank’s economics team.
The bank has also observed an increase in stress in its loan portfolios, with 18,000 hardship packages currently active, compared to 11,000 before the pandemic.
In terms of performance in major segments, the bank’s consumer banking division has experienced a significant decline in profits due to competitive pricing in home loans. Nonetheless, amidst the competitive environment, Westpac has managed to demonstrate growth in major Australian segments, including mortgages, deposits, and business lending. Although the net interest margin has slightly dropped, the bank remains optimistic about its future performance despite economic uncertainties and competitive challenges in the banking sector.