Westpac's Net Profit Dips but Unveils $661M Additional Buyback
Westpac Banking Corp, one of Australia's major banks, reported a 16% decrease in net profit for the first half of the fiscal year, attributing the decline to intense competition in the mortgage lending market and rising costs. This competitive environment has led to reduced loan rates even as banks pay more interest to depositors, resulting in tighter margins. Westpac's net interest margin, a key profitability measure for banks, fell to 1.89%, a decrease of 7 basis points compared to the same period last year. The bank's net profit stood at AUD 3.34 billion, down from AUD 4.00 billion a year earlier.
Despite the fall in profit, Westpac announced an enhancement to its shareholder returns, adding an additional AUD 661 million to its share buyback program, which now totals AUD 2.5 billion. The bank also declared an interim dividend of 75 Australian cents per share, alongside a special dividend of 15 cents per share.
Meanwhile, Westpac's New Zealand operation saw a contrasting performance, with a 20% rise in half-year profit. This improvement was largely due to a significant reduction in loan impairment charges following last year's extreme weather events, including Cyclone Gabrielle. The New Zealand division's net profit after tax climbed to NZD 562 million, up from NZD 467 million, while its net interest income increased by 6% to NZD 1.384 billion. Despite global economic pressures, Westpac NZ's CEO expressed cautious optimism for the economic outlook towards the year's end. Westpac NZ will pay an interim dividend of NZD 314 million, a slight decrease from the previous year's NZD 326 million.
