Westpac has today announced cash earnings of $3.5bn for the six months to March 31, 3013, up 10% compared to the same period last year.
Lending increased $15 billion, up 3% on 1H12 (1% on 2H12), which the major bank says reflects modest system growth and a ‘disciplined’ approach to pricing.
“The growth was primarily from consumer lending (including mortgages) and from growth in target segments such as trade finance, natural resources and Bank of Melbourne in Victoria.”
Westpac Group CEO, Gail Kelly, says the results show the strength of the Westpac Group.
“Momentum continued to build over the period, with all our Australian businesses producing double-digit cash earnings growth compared to the same period last year.”
However, she notes, the operating environment continues to be challenging, with ‘subdued’ lending growth.
“In line with our strategy, we are actively targeting opportunities in higher growth areas where conditions are more favourable, such as deposits, wealth, trade finance and natural resources. We are being disciplined in our approach, balancing growth, productivity, returns and strength. We are particularly pleased with the improvement in ROE, which now stands at 16.1%.”
The report also says average funding costs continued to increase, ‘reflecting higher deposit costs and a strengthening in the composition of Westpac’s funding base’.
Westpac subsidiary, St.George Banking Group, achieved cash earnings up 25% on 1H12. All of the division’s brands - St.George, Bank of Melbourne, BankSA and RAMS - contributed positively to the result.
Growth in lending and deposits was solid across the brands, according to the report, but particularly in Bank of Melbourne.
“We are focused on managing our business in a disciplined way in the current environment,” says Kelly. “We remain committed to deepening our relationships with customers, simplifying the organisation and delivering strong returns for shareholders.”