Westpac reports flat Full Year profit of $8 billion

Earnings for the year ending September 30 came in at A$8.07 billion, with a marginal different from the A$8.06 billion last year.

Westpac bank’s customer refunds and legal costs soared in the wake of the Royal Commission into the big banks, holding the second largest cash lender accountable for misconduct.

Westpac explained the flat profit is due to extra costs for remediation and mortgage-funding after the public inquiry.

“While the economic environment remains supportive, this result reflects the tough operating conditions for banks, with higher regulatory, compliance, and funding costs, and increased competitive pressure,” Westpac Chief Executive, Brian Hartzer said.

Cash earnings for the year to Sept. 30 were dragged down by a 10 % decline during the second half of the year, as Westpac began compensating wronged resulting in a lower than an average estimate of A$8.18 billion from analysts.

Westpac said it had booked a A$380 million charge to account for refunds, the costs of remediating wronged customers and higher litigation costs. It spent an additional A$62 million in expenses associated with the inquiry.

Earlier in the year, Westpac agreed to pay a A$35 million fine for wrongly approving thousands of mortgages.

Westpac’s Full Year earnings

Westpac’s full year Net Profit was up 1% at $8,095 million, with a full year Net interest income $16,339 Million.

Common Equity Tier 1 Capital Ratio was unchanged at 10.6%, and Fully Franked Dividend as at September 30 were 94 cents Per share.

Net interest income during the second half fell 3 percent, hit by lower markets income, subdued growth in home loans and higher funding costs.

Mr Hartzer said the bank expects house prices to cool further, and investor demand to remain weak and consumers are likely to be more cautious in the face of flat wages growth and a soft housing market.