Westpac adds to banking sector profits


Australia's Westpac Bank joined ANZ and CBA in reporting record 2001 profits

By CNN's Geoff Hiscock
Asia business editor

SYDNEY, Australia (CNN) -- The strong performance of Australia's banking sector continued Friday, with fourth-ranked Westpac Banking Corp reporting a record net profit of $965 million (Aust. $1903 million).

The result sent Westpac shares to a new high of A$14.92 on the Australian Stock Exchange, before easing slightly in afternoon trade to A$14.86. That is a gain of 19 cents, or 1.3 percent.

Banks made up the best-performing segment of the Australian stock market in October, putting on 13.4 percent compared with the market's overall gain of 6.6 percent.

Between them, Australia's big four banks are likely to earn $5 billion (more than A$10 billion) in profits this year.

Westpac's result comes a week after its closest rival, third-ranked ANZ Bank also reported a record profit of $953 million (A$1.87 billion) and No. 2 Commonwealth Bank of Australia (CBA) said it was on track for double-digit growth in 2001-02.

In August, the CBA reported an operating profit of $1.22 billion (A$2.26 billion) for the year to June 30, 2001.

NAB to report next week

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National Australia Bank, the biggest of the four leading Australian banks by market capitalization, reported a 26 percent jump in first-half profit to just over $1 billion ($2 billion) and said it was on track for a record year.

It will report its full-year results next week.

Westpac chief executive David Morgan said the bank's low-risk strategy was paying off, with revenue up 8 percent and net profit up 11 percent for the year ended September 30. Earnings per share rose 16 percent to A$1.03.

Morgan said the bank believed the Australian economy was "relatively well positioned" to weather the impact of the global economic slowdown, and expects continued growth in 2002.

"In most planning scenarios, our strategy can deliver double-digit growth in earnings per share and we see no current impediment to this in 2002," Morgan said in a statement to the ASX Friday.

The big four banks rank among Australia's eight largest companies by market capitalization.

But the size of their profits, coupled with staff cuts and the closure of regional branches in favor of electronic banking, has provoked a consumer backlash in recent years.

This has seen the emergence of several small community banks in regional Australia. These usually have the backing of local government authorities and small businesses.