SYDNEY (AFP) — Australia's fourth largest bank, Westpac, announced a 10 percent rise in interim cash net profit on Thursday and assured the market it was well positioned to ride out current market volatility.
Westpac said cash net profit was 1.84 billion dollars (1.74 billion US) in the six months to March, just beating market expectations of 1.8 billion.
Just as importantly in a climate where investors are jittery about the global credit crunch's potential to cause a blowout in bad debts, Westpac said it was "appropriately provisioned for known risks".
"While we remain cautious in terms of our outlook, I am pleased to say that we are in good shape to continue to support our customers and build the next phase of our growth," chief executive Gail Kelly said.
Westpac's losses from bad debts rose to 433 million dollars from 232 million during the reporting period, a significant increase but well short of the 980 million blowout reported by rival ANZ last week.
Westpac said it had reacted proactively to the credit crisis by doubling its liquid assets to increase funding flexibility and maintaining lending discipline.
The bank predicted the credit crunch and Australia's high interest rates would lead to higher funding costs and slower economic growth.
"Westpac expects the (banking) sector to have slower loan growth, higher impairment charges in both consumer and business segments, continuing market volatility and for higher funding costs to persist," it said.
Westpac's first-half net profit including one-off items rose 34 percent to 2.2 billion dollars.
The bank's consumer financial services unit posted a 10 percent rise in interim profit to 441 million dollars, while interim profit at its business financial services unit rose 13 percent to 538 million.
The market responded positively to the results, sending Westpac shares up 1.4 percent to 24.83 dollars in early trade on a falling overall market.
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