Westpac profit down to $7b, lifts share buyback

Westpac has increased it share buyback and reported profit that beat estimates amid higher interest rates that buoyed the bank’s margins.

The firm will raise the buyback by $1 billion to $2b, it said Monday. That came as net income reached $7b in the 12 months to September 30, down from $7.2b in the previous year, surpassing the average expectation of $6.84b in a Bloomberg survey of analysts.

“We’ve continued to manage margins well in a competitive environment while growing in line with system in loans and deposits,” said Westpac chief executive Peter King, who will retire next month and hand the reins to former business banking head Anthony Miller.

Westpac shares are up about 40 per cent this year, the best performer among Australia’s four largest banks. Investors are watching for more clues on the firm’s strategy under Miller, following its struggles under Mr King to complete a cost cutting and restructuring program.

Mr King indicated the domestic economy remains robust and said he expects relief from Reserve Bank of Australia rate reductions next year.

“Some central banks have shifted to an easing cycle and the RBA is likely to follow in 2025,” Mr King said. “This will be good news for many households and businesses. Combined with an undersupply of housing, population growth and limited spare capacity across much of the business sector, we expect solid demand for both housing and business credit in 2025.”

Mr King said it makes sense to maintain a strong balance sheet as geopolitical uncertainty and the impact of overseas elections remain hard to predict.

The bank’s completion of some large technology overhauls allowed it to shrink investment spending by 9 per cent to $1.8b.

Mr King said he’s leaving Westpac a “simpler, stronger bank.”

Bloomberg