Westpac share price drops on "disappointing" 2019 H1 earnings

Westpac share price

Westpac shares were down 2.3% on Monday after the release of its 2019 H1 earnings. Shares fell to 2-week lows to A$26.81 at time of writing.

Westpac H1 earnings results

Westpac H1 cash earnings fell to A$3.30 billion comparing with A$4.25 billion from a year ago. The bank says the profits were hit by a surge in customer refunds, following the banking royal commission.

The cash profit missed analysts’ expectations of A$3.52 billion, while the bank’s net profit fell 24% to A$3.2 million.

Net interest margin fell 16 basis points to 2.12%. The bank said it expected challenging conditions due to an “uncertain international backdrop” as well as softer house prices until 2020.

Westpac maintained its interim dividend at A$0.94 a share.

Customer remediation

Westpac group CEO, Brian Hartzer said: ‘This is a disappointing result reflecting weaker business conditions and the bank dealing decisively with outstanding issues, including remediation and resetting our wealth strategy.’

The bank said the past six months had been a turning point, and productivity remained a top priority in the future.

Mr Hartzer said that the bank was still on track to deliver its target of $400 million in productivity savings over the year. The bank had reduced its full time staff by 788 in H1 and reduced expenses excluding major customer remediation.

Westpac provisioned $1.45 million pre-tax over three years to work on its customer remediation programs, including $1.24 million for customer refunds.

Mr Hartzer said, over the past 18 months Westpac had repaid around $200 million to customers.

Last week, Westpac flagged its half year profit would be hit by A$617 million due to provision for refunding wronged customers.