Westpac first half profit up 7% to $3.43bn

Decrease in debts and boost in lending to position the lender in delivering solid results until the second half.

Westpac Banking Corp. (WBC), Australia’s second-biggest lender, said first-half cash profit rose 7 percent as bad debts fell and home lending increased.

Cash earnings gained to A$3.17 billion (US$3.43 billion) in the six months ended March 31 from a year earlier, the bank said on Wednesday. The shares fell the most in six months after net profit of A$3.96 billion (US$4.23 billion) missed the A$4.13 billion (US$4.42 billion) median estimate of four analysts surveyed by Bloomberg News.

Chief Executive Officer Gail Kelly has boosted earnings by raising borrowing costs more than the country’s central bank to offset higher funding costs and slowing credit growth. Melbourne-based rival Australia & New Zealand Banking Group Ltd. (ANZ) on Tuesday posted the smallest half-yearly profit increase in 2 1/2 years as lending profitability slipped.

“Westpac is reasonably well positioned to continue delivering solid results in the second half,” Victor German, an analyst at Nomura Australia Ltd. with a “buy” rating on the stock, said in a telephone interview. “Their cost performance is very good and the revenue trends were good.”

Westpac shares fell 2.5 percent to A$24.11 (US$25.79) in Sydney, the biggest drop since Nov. 8, as the benchmark S&P/ASX 200 Index lost 0.9 percent. Westpac has gained 8.6 percent this year, the second-best performer among Australia’s four largest lenders behind National Australia Bank Ltd. (NAB), which advanced 11 percent. Commonwealth Bank of Australia (CBA) has climbed 3.7 percent and ANZ Bank has added 0.4 percent.

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