Westpac profit up 30% to US$2.5bln

Lender posted above-expected net profit but cautious on Europe credit crisis’ effect on Australian market.

Westpac Banking Corp, Australia's No.2 home lender, reported an above-forecast 30 percent jump in half-year profit on Wednesday, as bad debt charges dived, but it voiced caution over Europe's debt crisis.

The bank said Australia's economy was strong, but Europe's debt woes showed conditions were fragile and would continue driving up wholesale funding costs, matching comments from rival Australia and New Zealand Banking Group last week.

"The globe is still a pretty uncertain place," Chief Financial Officer Phil Coffey told reporters.

Tighter capital requirements forced on banks to prevent another meltdown and higher credit costs were likely to weigh on the Australian market over the next two years, the bank said.

To help offset more expensive wholesale funding, Westpac has been more aggressive in raising mortgage rates than its rivals.

That showed in its net interest income, up 6 percent in the first half, but the higher funding costs, partly due to Westpac taking on longer-term funding, crimped net interest margin.

View the full story in CNBC.