Read the following extract from The Financial Review of May 6th, 2010
Read the
following
extract
from
The Financial Review
of May
6th, 2010
by
Vesna Poljak
.
Westpac sails
to $3 billion
super
profit
Bad debts down,home loans
up
GFCaftershocksa
concern
Westpac BankingCorp chiefexecutive Gail
Kelly
delivereda firsthalfcash profit
of $3
billion, up 30
percent,as bad debts
from
institutional borrowers shrank
dramatically
and earnings
from
wealthmanagement and NewZealand
improved.
However,she warned
that the
impact
of the global
financial
crisis would be felt
by
Australia
for
many
years.
Westpacused the
tail
end
of
the financialcrisis
to
snarea
2
percentage point
increase in
mortgagemarket share
over the
past 18/months,valued
at an
extra
$15billion in
loans
–
something
Mrs Kelly
estimated
would
havetaken
10
years
to
claw from her
rivals
in
ordinary
times.
The bank now writesmore than one
in four
mortgages,
with
a 27 per cent share
of the
market,and dominates home loans alongside Commonwealth Bank
of Australia.
Mrs Kelly
predicted credit growth
would
improve
for
the remainder
of this
year
and
next, led
by
a turnaround
in
business lending, which
will
swing
from
a contraction
of
3
per cent
to
growth
of 6
per cent
by 2011.
She sought
to
temper the optimism
f
anned
by
the strongresult,
which
puts the
bank
within
striking distance
of
a full-year
cash
profit of
$6
billion.
“W
e
are advocates
for
caution.
I’m
always concerned when people
talk of
the GFCas
being over,
implying
that we’reback
to
normal,” she
said.
“There’
s
no doubt we
will
be
living with
the effectsand the consequences
of
this
crisis
for
manyyears
to come.”
Statutorynet
profit
increased 32 per cent
to
$2.9
billion…….
…..Mrs
Kelly
dampened expectations
for
the bank’s outlook
by
saying that
delivering
cash earnings growth
in
the second
half
wouldbe
challenging.
“Giventhe
f
act
that we had such a
strong first-half
result on such a materialreduction
in
the impairmentcharge,
I
thought
it
was prudent
to
call out that
to
continue growing
of
f
that
kind of
base
will
be quitechallenging,” she said, stressing
this did not
constitute
earnings
guidance……
….Asked
of
the
risk
posed
to
banks
by a tax to mirror that
already seen
with
r
e
gar
d
to
the new proposed
tax on
miningcompanies
r
ecommended
in
the government’s
re-
sponse
to
the Henry
r
e
vie
w
,
Mr
s
Kelly
said the financial services industrywas
already
the highest taxpaying
secto
r
.
“
W
e
are alreadythe sector that actuallypays
the
highest
effective tax
rate
