King: Q1 results show good ‘progress’

Westpac chief executive Peter King said stronger economic conditions and “solid progress” on the bank’s strategic priorities during the December quarter had contributed to “a good start to the year”.

In a first quarter update released today, Mr King unveiled cash earnings (excluding notable items) of $1.97 billion, up 54 per cent from the average in the second half of 2020, noting the improved performance was boosted by an impairment benefit.

“We’ve seen better economic outcomes and forecasts… which, together with a big improvement in our credit quality, has seen less need for provisions,” he said.

Mr King said recovering economic conditions had also contributed to higher numbers of customers returning to repayments during the quarter after deferring their loans as part of the bank’s package to support COVID-affected customers, due to end in the next couple of months. Around 2 per cent of Westpac’s Australian mortgage book remained on deferral packages, and Mr King said fewer customers than earlier feared had gone into the hardship process.

He also noted home lending activity had picked up during the quarter, the bank’s average weekly mortgage applications more than a third higher compared with the previous corresponding quarter, driven both by improvements in the bank’s lending processes as part of his “fix, simplify, perform” strategy, along with solid demand in the property market.

Mr King said the bank’s capital position was “very healthy”, reporting a capital ratio more than a full percentage point higher over the year to 11.9 per cent.

Although uncertainty remained around the impact of local COVID outbreaks, Mr King said he was “positive” about the economic outlook.

“The last couple of forecasts from Westpac economics have been upgrades – whether they be about demand for home loans or demand for business lending – expectations are positive, and that's a good foundation for a bank,” he said.

Mr King said a more detailed performance update, including a cost plan, would be released with the bank’s half year result in early May.