Westpac Banking topped market forecasts yesterday after strong business lending and buoyant home loans drove second-half profits higher, although uncertainty about the year ahead unnerved some investors.
Set to become Australia's fourth-largest bank later this year as its nearest rival grows by acquisition, Westpac also remainedcoy on speculation it might bid for the Australian operations of fund manager and life insurer AMP.
Westpac said full-year cash net profit climbed 10 per cent from a year ago to A$2.271 billion. Cash earnings per share were up 9 per cent, at the high end of Westpac's forecast.
This compared with ANZ Banking Group's 8.3 per cent rise in full-year net profit to A$2.348 billion, posted last week.
Westpac's second-half cash earnings before one-offs rose 15 per cent, at the high end of expectations and ahead of competitors, as lending in a buoyant property market remained at record levels despite losing some market share as investment property lending fell.
Net profit for the half year slipped to A$1.132 billion, down 3.5 per cent on the year-ago period, which included A$181 million in special gains from asset sales. Analysts had forecast A$1.129 billion.
However, the bank's shares fell slightly after it tipped improved earnings this year but failed to give specific guidance. It expects medium-term cash earnings growth of 6-10 per cent. Investors were mixed on whether profit growth may decline this financial year to September 30, 2004.
"Westpac has put in the best performance [of major banks]. I think people will probably be wanting to get a bit more confidence that is going to continue," said Shawn Burns, portfolio manager at Deutsche Asset Management.
Westpac shares, which have gained 18 per cent so far this year, were 0.2 per cent lower at A$16.26 in a slightly higher overall market. Other big banks firmed.
"Our outlook for continued earnings growth in 2004 remains positive," chief executive David Morgan said.
Westpac's result was boosted by strong home and commercial lending and improved profits from its recently integrated funds management businesses. The bank tipped Westpac's home lending market share to lift this year, although housing credit was likely to ease off record 20 per cent growth.
"They are the top pick in the sector. They should achieve the top end of their earnings guidance range in 2004. I think they will continue to perform at the top end for a while to come," Wilson HTM analyst Brett Le Mesurier said.
