UPDATE 1-Australia's Westpac post record cash profit, drop in bad debts helps
* Cash earnings A$7.1 billion in line with consensus
* Final dividend A$0.88 vs A$.084 a year earlier, A$0.10 special dividend
* Shares up by a third this year; broader market up 16 pct
By Jackie Range
SYDNEY, Nov 4 (Reuters) - Australia's Westpac Banking Corp said full-year cash earnings rose 8 percent, marking its fourth straight year of record profits, on a stronger performance across all its operating divisions and a 30 percent fall in bad debts.
The results complete a round of record earnings from the "Big Four" banks which together posted A$27 billion ($25.5 billion) in cash profit for their last financial year.
The country's second-biggest bank by market value booked cash profit of A$7.1 billion, in line with analysts' average forecast. Cash earnings exclude one-off and non-cash items and are a measure of profitability closely watched by investors.
Westpac also joined the other three in rewarding shareholders, hiking its final dividend 5 percent to A$0.88 per share and unveiling a special dividend of A$0.10 per share.
"Our businesses are all performing well, we are seeing tangible benefits from the investments we have made in our digital capabilities and distribution network, and our capital position is the strongest in the sector," Chief Executive Gail Kelly said in a statement. "There is no doubt that domestically we are seeing a pick-up in consumer confidence which we expect will translate to a gradual increase in credit growth."
Common equity tier one capital, a measure of the bank's ability to absorb unexpected losses, rose 94 basis points to 9.1 percent. Impairment charges fell to A$847 million, compared with A$1.2 billion a year ago.
Like rivals National Australia Bank Ltd, Australia and New Zealand Banking Group Ltd, Commonwealth Bank of Australia, Westpac derives much of its earnings power from highly profitable home mortgages. Westpac said its Australian housing loans had grown 4 percent over the period, with growth in lending partly offset by customers paying off their loans more quickly.
"The market will like this result because it is clean and doesn't contain any nasties but with Westpac trading on a price to earnings ratio of around 15 times this number - we're a little cautious on where margins are going next year," Peter Esho, chief market analyst at Invast Financial Services.
The nation's oldest bank also last month extended its reach in motor vehicle finance, equipment finance and corporate lending, paying $1.45 billion for an Australian portfolio owned by Lloyds Banking Group's.
Its shares have jumped by a third for the year to date, outperforming a 16 percent rise for the broader market.
($1 = 1.0597 Australian dollars) (Editing by Edwina Gibbs and Lincoln Feast)
- Housing, jobs data weaken, but overall economic picture still upbeat
- Putin critic Khodorkovsky in Germany after pardon
- Investigators look overseas for hackers in Target case: source
- Pizza outlet attacked as India, U.S. fail to cool diplomat row |
- New York Mayor-elect's reputation for lateness parodied on Twitter