Westpac profit surges to $7.2b despite cost of living pressures
The cost of living and housing affordability issues have not dented Westpac’s profit with the bank reporting a 26 per cent surge in earnings to $7.195 billion.
In fact, the bank’s margins increased over the year and chief executive Peter King said the company’s balance sheet was the strongest he has seen in his 29 years at Westpac.
The wave of cash has allowed the bank to announce an increased dividend and a $1.5 billion share buyback, which should boost the stock price.
The final dividend was 72 cents a share for a yearly total of $1.42, an increase of 14 per cent on 2022.
The booming result came despite what King said was a challenging year for the bank’s customers. Its consumer banking result was down 7 per cent with margins falling and expenses rising.
However, $74 billion of fixed rate loans expired during the year and King said most of those stayed with Westpac.
“Households have been squeezed by cost-of-living pressures and rising interest rates, meaning some have had to adjust their spending to keep up,” King said.
However, hardship numbers were about half that of the Covid era and there were not significant numbers falling behind on repayments because mortgage repayments were prioritised by customers.
“Looking ahead, there are some uncertainties in the economic outlook. While inflation is coming down, challenges remain, including volatile energy prices and geopolitical uncertainty due to conflict in Europe and the Middle East,” King said.
“In Australia, employment and productivity are key measures to watch.”
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He said employment would be tested in the coming year and consumer sentiment was weak.
“We are broadly positive about the economic outlook over the next year and Westpac is in a strong position to grow its business and support customers who need help,” he said.
