A woman exits the ground floor of an office building with Westpac logo amidst the easing of the coronavirus disease restrictions in the Central Business District of Sydney, Australia, June 3, 2020. Picture taken June 3, 2020. REUTERS/Loren Elliotton Monday posted over a 12% drop in first-half cash earnings, as its margins continued to be squeezed by stiff competition in mortgage lending amid record low interest rates and certain impairment charges.
Australia's "Big Four" banks enjoyed a boom in home lending helped by low rates and a pandemic-fuelled shift to remote working that buoyed property markets. But their margins have been hit by competition and by borrowers moving to fixed-rate loans. Westpac, which is also emerging from a costly turnaround to fix outdated software and convoluted procedures, said net interest margin - a key profitability indicator - fell 15 basis points to 1.91% in the first half.It recorded an impairment charge of A$139 million, as the bank set aside provisions for bad debts amid weather-related risks in Australia as well as the broader global uncertainties.
The country's third-largest bank reported cash earnings of A$3.10 billion for the six months ended March 31, compared with A$3.54 billion reported last year, but beat Visible Alpha consensus forecast of A$2.83 billion.