(RTTNews) – Australia’s Westpac Group (WBC.AX, WBK) reported that its statutory net profit for the first-half of 2021 was A$3.44 billion up 189% from last year, mainly due to an impairment benefit reflecting improved asset quality and a better economic outlook.
Cash earnings were A$3.54 billion, up 256% from the previous year. Excluding notable items, cash earnings were A$3.82 billion, up 60% from the previous year.
The company reported cash earnings per share of 97 cents, more than tripled from the prior year.
Westpac was targeting an A$8 billion cost base by financial year 2024 to materially improve its efficiency. A significant reset is required to ensure the business is cost competitive over the long term, particularly as it navigates the pandemic’s recovery phase and an extended low-rate environment, the company said.
According to the company, the main drivers are simplification and digitization as it exits all specialist businesses and accelerate its digital transformation. It needs to do things differently to deliver a competitive cost base, including redesigning and digitizing many of its processes.
The company expects costs to increase in fiscal year 2021 as it delivers on Fix priority, before starting to fall from fiscal year 2022.
Westpac said its board has determined an interim dividend of 58 cents per share to be paid on 25 June 2021.
While challenges remain, the company expects the Australian economy to expand by 4.5 per cent in 2021, supporting a 4.6 per cent increase in total credit with residential lending expanding 6.5 per cent.
Overall business investment is forecast to expand by 3.7 per cent in 2021, centred on a 12.5 per cent lift in equipment.
The company said it is continuing to assess what is in the best interests of shareholders regarding the ownership of our New Zealand business.
In a separate press release, Westpac New Zealand Limited Chief Executive Officer, David McLean, will be retiring after more than 20 years with the Group.
McLean will remain in the role until 25 June after which time Simon Power, General Manager Institutional & Business Banking will act as CEO, subject to regulatory approval, while a global search is completed.
McLean joined Westpac New Zealand in 1999 and held a number of senior roles across retail and institutional banking, before being appointed CEO Westpac New Zealand Limited in February 2015.