Westpac Quarterly Profit Report Shows Decrease in Net Profit
Westpac Banking Corp has reported a lower first-quarter net profit, citing the impact of notable items which the company expects to reverse in the future. The Australian lender recorded an unaudited net profit of 1.5 billion Australian dollars for the three months ending December, a 6% decrease from the quarterly average of the previous six months.
Excluding the notable items, which were related solely to hedge accounting, Westpac's quarterly net profit stood at A$1.8 billion, aligning with the average of the past six months. CEO Peter King remains optimistic about the economy, stating that low unemployment and "healthy" corporate sector balance sheets will continue to support its resilience. King also believes that the economic slowdown and decreasing inflationary pressures will provide opportunities for monetary policy to become less restrictive in the coming year.
The net interest margin (NIM) for Westpac in the first quarter was 1.78%, with a core NIM of 1.80%. This represents a 4 basis point decrease compared to the second half of the fiscal year. Despite facing headwinds in lending and deposit sectors, Westpac claims that it managed the NIM well. The Australian bank has benefitted from higher interest rates, but intense competition in home loans and customer deposits has offset some of those gains.
In conclusion, Westpac Banking Corp has reported a decrease in net profit for the first quarter, primarily due to the impact of notable items. However, the company remains confident in the resilience of the Australian economy and expects monetary policy to become less restrictive in the near future.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always do your own research before making any investment decisions.
Analyst comment
Neutral news. The lower first-quarter net profit is driven by notable items, but the company expects these to reverse over time. Excluding these items, net profit is in line with previous months. The CEO expects the economy to remain resilient, providing scope for monetary policy to become less restrictive. Net interest margin and core NIM have slightly declined due to competition on home loans and customer deposits. Market reaction may be muted as the company expects a recovery in profit and a supportive economic environment.
