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Australian banking heavyweight Westpac H1 net profit up 10%

SYDNEY--Australian banking heavyweight Westpac announced a 10 percent jump in first-half net profit Monday to AU$3.62 billion (US$3.35 billion), driven by strong performances across all divisions as lending continued to grow.

The cash profit of Australia's second largest bank, the industry's preferred measure which strips out volatile items, rose 8 percent to AU$3.77 billion in the six months to the end of March, slightly above expectations.

Despite the buoyant figures, Westpac shares closed 1.2 percent lower at AU$34.45 in a generally weak market

Chief executive Gail Kelly said the result was driven by a strong overall performance, supported by improvements in asset quality.

“I am pleased with this result and the momentum we have built across the group. It is a strong performance and reflects the consistent execution of our strategy, which has customers at its center,” she said.

“Our balance sheet is strong, and we have sector-leading positions in capital, credit quality and in productivity. This enables us to further support customers as we tilt towards growth.”

Over the six-month period the bank provided more than AU$41 billion in new lending to Australian retail and business customers.

Westpac said its housing loans in Australia were up 5 percent while personal lending spiked 21 percent. Business lending also grew 5 percent.

The Sydney-based lender declared an interim dividend of 90 cents, up 5 percent on a year earlier. But there was no special one-off dividend that had been widely tipped.

IG market strategist Evan Lucas said the profit result was stellar but, digging deeper, the result looked benign with institutional banking's earnings going backwards — an area the other major banks have increased.

“At the moment, the banks are really easy to poke holes in because they are so fully (share price) valued,” he said.

“(The profit) comes down to their consolidation rather than growth story.”

Last week, the Australia and New Zealand Banking Group posted a first-half net profit rise of 15 percent to AU$3.38 billion. National Australia Bank reports its half-yearly results on Thursday.

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A man walks out of a Westpac Bank in the central business district of Sydney on Monday, May 5.

(AFP)

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