Westpac raises home loan rates and its shares soar

Cameron Spencer/Getty Images

Westpac’s shares soared when Australia’s oldest bank came out of a trading halt today after raising home loan interest rates.

The bank last week increased its variable home loan rates by 0.2 of a percentage point to 5.68%.

At the same time, the bank announced plans for a $3.5 billion equity capital raising.

Westpac said it needed to do both to meet stricter rules requiring banks to hold more capital to make them safer.

Commentators believe Westpac raising rates makes it more likely the Reserve Bank will cut official cash rates further from the current 2%.

The bank also last week released preliminary full year results, showing a 3% rise in cash earnings of $7.820 billion. Statutory net profit was up 6% to $8.012 billion.

The bank came out of a trading halt today, releasing details of the capital raising entitlement for one new share at $25.50 each for every 23 shares held.

A short time ago, Westpac was up more than 4% to $31.70, well ahead of the other major banks. The ANZ was up 0.73% to $28.88.

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