BankSA has lifted its profit by 4 per cent in the six months to 31 March, the bank announced today.
The increase in net profit after tax, compared to the same period last year, resulted in a $121 million profit for the bank.
BankSA said the result was due to an increase in home and business lending, growth in deposits, customer growth and a reduction in impairments.
Chief executive Nick Reade said the results were due to a “transformation” in the bank’s approach.
“About 12 months ago we decided it was time to take stock, listen to our customers and, as a result, do things differently,” Reade said. “So it’s pleasing to see these changes are starting to be reflected in our results.”
Compared to the same period last year, BankSA’s total lending increased by 5 per cent to $21 billion, and commercial loans increased by 3 per cent to $6 billion.
Read said the bank had seen further growth in SME lending “despite a challenging local marketplace”, due to its decision to separate SME support from general commercial banking.
BankSA is part of the Westpac Banking Corporation, which today posted a flat profit result.
Westpac shares have dropped more than four per cent after the bank posted a disappointing $3.78 billion first half cash profit.
The result for the six months to March 31, is flat compared to a year ago and below the $3.88 billion cash profit the market had expected.
IG market strategist Evan Lucas said the result was weaker than even the most pessimistic analyst forecast.
“It’s one of the poorest Westpac results I’ve seen in four or five years,” he said.
“There’s a lot of questions there, and not good ones.”
Westpac shares were down $1.54 to $35.19 as of 1010 AEST.
Net profit, which includes one-off items, was $3.609 billion, compared to $3.622 billion for the same period a year ago.
Meanwhile, Westpac lifted its fully-franked interim dividend three cents to 93 cents per share.
The result was weighed down by a 17 per cent slide in earnings from Westpac’s institutional bank, but the bank also suffered due to tough competition for home loans.
Westpac’s net interest margin, a measure of the profit it makes on loans, fell six basis points to 2.05 per cent.
But net interest income was up four per cent to $6.93 billion following a seven per cent increase in Australian housing lending.
Chief executive Brian Hartzer expects competition for loans to remain intense but believes growth in the housing market will help offset weakness from other parts of the economy, including mining.
“Areas like housing, infrastructure, and agriculture will do relatively well, while other areas such as mining and resource-driven regions and adjacent service providers will find it tough,” he said.
“For Australian banks, this means that credit growth will be modest but positive with housing growing faster than business.”
Westpac has also announced it will use the proceeds of its dividend reinvestment program to lift its capital reserve ratios, the amount of money it holds against loans.
The bank’s common equity tier 1 ratio was 8.8 per cent during the half, which is at the bottom end of Westpac’s target range and it hopes to raise $2 billion in fresh capital through the reinvestment plan, which will include a 1.5 per cent discount for shareholders.
– with AAP
