Westpac’s full year profit is flat at $8 billion

  • Westpac’s full year statutory net profit $8.095 billion, up 1%.
  • Cash earnings $8.065 billion, little changed.
  • Unchanged, final, fully franked dividend of 94 cents a share.

Westpac announced a full year profit of $8.06 billion, flat on last year, on the back of higher costs relating to customer refunds during a “tough” and “difficult” year.

Statutory net profit was up 1% $8.09 billion.

The company says the result was dragged down by higher provisions relating to customer refunds, payments and costs, the full period impact of the bank levy, and a lower markets contribution.

Provisions for customer refunds and related costs, along with legal costs, were $281 million after tax — equivalent to 3.5% of cash earnings.

The bank levy was $378 million before tax, equivalent to 8 cents a share.

However, the bank lifted productivity savings 16% to $304 million over the year. Full time staff numbers were flat at 35,000.

CEO Brian Hartzer described the year as difficult.

“While the economic environment remains supportive, this result reflects the tough operating conditions for banks, with higher regulatory, compliance, and funding costs, and increased competitive pressure, particularly in the second half,” he says.

“While earnings were flat, our balance sheet remains strong across all dimensions of asset quality, capital, and liquidity. We have also made substantial progress on our service-led strategy and digital transformation program.

“Westpac’s mortgage book remains fundamentally sound, with around 70% of Australian customers ahead on repayments and 90 day delinquencies remaining low.”

Hartzer says Westpac continues to focus on addressing issues highlighted during the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry.

“We remain committed to getting things right for our customers,” he says.

He says the outlook for the Australian economy remains positive, although there are likely to be economic headwinds in 2019, with GDP growth expected to moderate to around 2.7%.

And consumers are likely to be more cautious in the face of flat wages growth and a soft housing market, while uncertainty ahead of a Federal election and a less favourable international backdrop are likely to weigh on business investment decisions.

“Employment growth is expected to remain solid, with continuing above-trend investment in private and public infrastructure,” he says.

“However, household income growth remains subdued and inflation is low. We expect the Reserve Bank of Australia to keep rates on hold throughout 2019.”

A full franked 94 cents a share final dividend, unchanged on last year, was declared, bringing the full year payout to 188 cents.

The 2018 numbers at a glance: