Westpac posted a 3% rise in full year cash profit to $8.06 billion, below the consensus forecast of $8.16, and kept the dividend flow to shareholders steady.
Statutory net profit was $7.99 billion, up 7%, as lending grew by 3% and customer deposits 4%.
The bank declared a fully franked dividend of 94 cents a share, unchanged from the year before.
CEO Brian Hartzer says this is a solid result in a challenging environment.
“At a time of substantial change in our industry, we’ve got a clear strategic agenda that is delivering for both customers and shareholders,” he says.
In early trade on the ASX, Westpac shares were down 2.4% to 32.46.
Westpac’s revenue in 2017 was up 4% to $21.8 billion and expenses 2% to $9.43 billion.
Employee numbers fell 1%, or by 484 positions, to 35,096 but staff expenses were 2% higher at $4.66 billion due to annual salary increases, partly offsets by productivity benefits, lower restructuring costs and reduced share based payments.
Loan impairment charges were down 24% to to $853 million. The ratio of stressed assets to total committed exposures (TCE) was down 15 basis points, mainly due to lower impaired assets, as this chart shows:
The rise in cash earnings was supported a 24% reduction in bad debt charges.
The net interest margin fell 4 basis points to 2.09%.
Loan growth was strongest in Australian mortgages and SME (small to medium enterprise) lending.
Hartzer says the outlook for Australia is positive overall, with GDP expected to grow by 2.5% by the end of 2018.
House price growth is expected to slow but mortgage serviceability remains strong with significant household equity.
““We remain positive about the Australian housing market, although we expect price growth to moderate through 2018,” he says.
“90+ day delinquencies remain low by historical measures and our home loan customers continue to take advantage of low interest rates with more than 70% of customers ahead on their repayments.”
The growth outlook will remain mixed across the country.
“We have a strong customer franchise which continues to grow, we are taking advantage of the opportunities created by a digital world, and we are well-positioned in the faster growing parts of our economy,” he says.
“These factors, plus a highly engaged culture that continues to attract great people, gives me confidence about Westpac’s outlook and our ability to outperform over the long term.”
The 2017 full year results at a glance:
“Economic growth is picking up around the world – most major markets are now growing, which is something we haven’t seen for a while,” says Hartzer.
“In the US, in France, and in other markets around the world governments are cutting taxes, cutting red tape, and investing in infrastructure. It’s a good reminder that policy certainty is a great spur to business investment.
“Business in Australia is ready to invest, however many of our customers are holding back because of policy uncertainty.
“Whether it’s on energy policy, transport infrastructure, or fixing up the tax arrangements between the states, governments at all levels need to come together with business for a common purpose to provide the certainty that’s needed to drive confidence.”