* H1 cash profit A$3.77 bln vs A$3.53 bln
* Dividend up 5 pct to A$0.90
* Bad debt charges and net interest margins fall
(Adds CEO comment, margins, impairment charges details)
SYDNEY, May 5 Australia's Westpac Banking Corp
said on Monday its first-half cash profit rose 8
percent to a record high, beating expectations, thanks to solid
growth in lending and a fall in bad debts.
Australian banks are on track for a sixth straight year of
record profits, bolstered by low interest rates which are
encouraging borrowers and shrinking costs associated with bad
debt provisions even as net interest margins come under
The bank sees a "modest increase" in lending to corporates
in the second half, Westpac CFO Peter King told reporters,
lifted by improving business sentiment in the country, record
low interest rates of 2.5 percent and an upswing in housing.
Business credit for the industry grew at an annual 4.4
percent in the three months to February. That is a step-up from
a 1.9 percent increase in the year to November, Westpac
economist Andrew Hanlan said in a report last week.
Westpac, Australia's second biggest bank by market value,
said cash profit rose to A$3.77 billion ($3.49 billion) in the
six months to March 31, compared with a consensus forecast of
A$3.6 billion and up from A$3.53 billion a year ago.
"The result was driven by a strong operating performance
from each division, supported by a further improvement in asset
quality," Westpac CEO Gail Kelly said in a statement.
The nation's oldest bank declared a dividend of A$0.90 per
share, up 5 percent.
Stressed assets continued to fall while bad debt additions
have also declined, the bank said. Impairment charges fell to
A$341 million, compared with A$438 million a year ago, it added.
Westpac said its net interest margins, a key gauge of
profitability, fell 8 basis points, in a sign that competition
for low-risk mortgages could be crimping the profitability of
Australia's "Big Four" banks.
Last week, Australia and New Zealand Banking Group Ltd
said its half-year net interest margins dropped to
their lowest level in six years.
($1 = 1.0795 Australian Dollars)
(Reporting by Swati Pandey and Lincoln Feast; Editing by
Marguerita Choy and Sandra Maler)