SYDNEY - Westpac Banking Corp today reported a record net profit of A$3.071 billion ($3.6 billion) for the 2005/06 year, up 13.8 per cent.
It said it expected improved performance momentum and strong cash earnings growth in 2006/07 despite expectations of an economic slowdown in New Zealand.
Australia'sfourth largest bank also reported record cash earnings of $3.079 billion, up 10 per cent.
Westpac chief executive David Morgan said the economic environment remained supportive for the bank in 2006/07, with growth expected to improve modestly and unemployment remaining at historic lows.
"We go into 2007 in good shape," Dr Morgan said.
"With our improved performance momentum we expect strong cash earnings growth in 2007."
Dr Morgan said the bank expects a slight easing in housing credit growth.
"Overall, we expect a slight easing in housing credit growth in 2007, while still remaining in double digits.
"Business credit should return to more sustainable levels after a very buoyant 2006.
"We also expect wealth management conditions to remain very positive, with the recent superannuation taxation changes assisting in driving growth."
However, New Zealand economic growth was expected to remain subdued, as high interest rates and a strong currency continue to dampen activity, with credit growth forecast to slow slightly in 2007.
Dr Morgan said the bank would take advantage of improved operational momentum and its orientation towards top line growth.
"We are targeting loan growth at least in line with system growth and, given current competitive intensity, expect margin decline to again be towards the upper end of our medium term expectations of 5 to 10 basis points."
Dr Morgan said business unit performance was strong, with the exception of the New Zealand consumer business.
Profits at Westpac's New Zealand unit was flat in New Zealand dollar terms but up 4.4 per cent in Australian dollars terms to A$423m.
In New Zealand, economic growth is expected to remain subdued, as high interest rates and a strong currency continue to dampen activity.
As a result, credit growth should slow slightly in 2007, Dr Morgan said.
Performance improvement in the New Zealand consumer segment remains a priority in a challenging environment, he said.
