MELBOURNE, Australia--Westpac Banking Corp. (WBC.AU) benefited from a pick-up in markets-related revenue and ongoing strength in mortgage lending over the first half of its financial year, helping to lift its profit for the period.
Net profit rose by 5.6% to 3.91 billion Australian dollars (US$2.90 billion) in the six months through March. That was up from A$3.70 billion a year earlier.
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Cash earnings--a measure that excludes some gains and costs and is favored by analysts--rose by 2.9% to A$4.02 billion, in line with the median of five forecasts compiled by The Wall Street Journal.
Westpac's institutional division was a standout for the half year thanks to improved credit quality, increased customer transactions and a boost from its markets business, Chief Executive Brian Hartzer said.
Still, Australia's oldest and second-largest bank by market value said margins in its consumer and business banking operations were squeezed by higher funding costs. That echoed comments from the country's other lenders in recent days.
Westpac's net interest income for the period was 1.8% higher at A$7.61 billion, with total loan growth of about 4% led largely by housing. However, the bank's net interest margin contracted by 4 basis points year-over-year to 2.05%.
Non-interest income was 5.3% stronger at A$3.16 billion, which Westpac said was largely due to improved markets-related income that offer lower insurance revenue.
The banks said asset quality for the period remained sound overall, and its impairment charges decreased by A$174 million, or 26%, on-year owing to a significant drop in provisions for "single-name" exposures.
Mr. Hartzer said the lender remained positive about the Australian housing market, although it expects price growth to moderate over 2017.
As expected, Westpac said it would hold its interim dividend steady on last year at of A$0.94 a share.
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(END) Dow Jones Newswires
May 07, 2017 18:37 ET (22:37 GMT)