Australia’s Westpac reported strong results with first half 2021 net profits up 189% YoY to A$3.4bn ($2.6bn) and cash earnings at A$3.5bn ($2.7bn), up 256%. The rise in cash earnings also contributed to an increase in their CET1 ratio to 12.34%, up 153bp as per the lender. Westpac noted that earnings were boosted by impairment benefits across their divisions. Further, stressed exposures to total committed exposures ended at 1.6% compared to 1.91% as at end-September 2020. Group CEO Peter King said, “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. Importantly, we are beginning to see the benefits of our new operating model through improved performance. While the economic outlook is more positive, there is still some uncertainty and we have remained prudent in our impairment provisioning.” The lender declared an interim dividend of 58 cents a share after not paying one last year due to writedowns and provisioning. They also noted that they will be closing some branches and shift focus to digital banking under a cost-cutting plan. The CEO said they were targeting an AUD 8bn ($6.2bn) cost base by FY2024 to materially improve efficiency . If achieved, this would be an improvement from their current AUD 10.2bn ($7.8bn) in costs.
Westpac’s dollar bonds were flat – its 0.369% Perp was at 92.98, yielding 0.43%.
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