Westpac have posted better than expected results for the first half of 2021, exceeding many pundits’ estimations and rebounding after their slump in 2020.
The Big Four bank ended the day with their share price at $26.30, a jump of 5.28% on their starting position. They surpassed their share price from February 2020, when the pandemic first sent markets crashing.
Cash earnings were up 256% and statutory net profits up 189% on the same period in 2020. The news comes on the back of significant cost cutting and streamlining at the bank, as well as accelerating the speed of their digital transformation.
Peter King, Westpac’s CEO, told shareholders that the process was no over, and that he would attempt to slash a further $2 billion from the cost base.
“A significant reset is required to ensure the business is cost competitive over the long term, particularly as we navigate the pandemic’s recovery phase and an extended low-rate environment,” he said.
In the written statement that accompanied the results, King put the success of the first half of 2021 down to a strengthen economy, and in the buoyant housing market in particular.
“First half earnings were considerably higher than the prior corresponding period, mainly due to an impairment benefit reflecting improved asset quality and a better economic outlook,” he wrote.
“Notable items were also lower. We improved balance sheet strength, with our Common Equity Tier 1 capital ratio rising 153 basis points to 12.34 per cent. Importantly, we are beginning to see the benefits of our new operating model through improved performance.
“Our Australian mortgage book increased $2.6 billion over the past six months, with good growth in owner occupier loans partly offset by lower investor lending. Owner occupier loans increased 3 per cent, with first home buyers making up 13 per cent of new loans.”