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Westpac profit plummets by 62 per cent

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Westpac has deferred a decision on paying an interim dividend to shareholders after posting a 70 per cent drop in first-half cash earnings following a hefty impairment charge due to the coronavirus outbreak.

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Australia’s second-largest lender reported cash earnings fell to $993 million for the six months ended March 31, from $3.30 billion a year earlier.

Net profit was down 62 per cent to $1.19 billion.

This follows its announcement last week of a $1.6 billion impairment charge for potential loan defaults due to the COVID-19 related shutdown.

It has also provisioned $900 million for a potential legal penalty from AUSTRAC proceedings related to breaches of anti-money laundering laws.

“This is the most difficult result Westpac has seen in many years. It is significantly impacted by higher impairment charges due to COVID-19, as well as notable items including the AUSTRAC provision,” Westpac Group chief executive Peter King said in a statement.

“In light of the changed economic outlook we have increased Westpac’s provisions for expected credit losses to $5.8 billion, which includes approximately $1.6 billion of additional impairment charges predominantly related to COVID-19 impacts,” he said.

Westpac joins smaller rival ANZ in holding off paying shareholders an interim dividend after that lender also posted a 62 per cent slide in its first-half cash profit due to the COVID-19 hit.

Westpac had paid a fully franked interim dividend of 94 cents a share a year ago.

-AAP

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