Westpac’s annual net profit has edged 1 per cent higher to $8.1 billion, with the bank’s preferred cash profit measure flat and around the same level.
The cash result came in slightly below the $8.2 billion estimate from six analysts surveyed by Reuters.
The bank noted that it had second-half provisions for customer refunds and related costs, including legal costs, of $281 million, as the fallout from the financial services royal commission continues.
“While the economic environment remains supportive, this result reflects the tough operating conditions for banks, with higher regulatory, compliance, and funding costs, and increased competitive pressure, particularly in the second half,” Westpac chief executive Brian Hartzer said in a statement.
However, Westpac said it offset this by increasing “productivity savings” by 16 per cent to $304 million during the year.
The bank was also at pains to tell investors that it was not seeing any increase in stress in its mortgage book.
“Westpac’s mortgage book remains fundamentally sound, with around 70 per cent of Australian customers ahead on repayments [including mortgage offset accounts] and 90-day delinquencies remaining low,” Mr Hartzer noted.
“We expect house prices to cool further, and investor demand to remain weak. On the other hand, demand from first home buyers is holding up.
“These dynamics are likely to lead to housing credit growth easing to 4 per cent next year, with total credit growth of 3.5 per cent.”
The bank has left its final dividend unchanged at 94 cents per share, fully franked, which takes payouts to shareholders over the full year to 188 cents per share.
More to come.