Westpac Says Asset Quality Improving; to Focus on Cost ControlNarayanan Somasundaram
Westpac Banking Corp., Australia’s second-largest lender by market value, said soured loans have continued to fall for its biggest unit as the bank seeks to cut costs by simplifying its business.
Westpac expects to decrease the size of its branches by 25 percent and reduce its product range, the lender said in a strategy update today for its Australian Financial Services division. The bank expects the Internet and mobile technology to account for 95 percent of transactions in five years, up from 85 percent now, Brian Hartzer, who heads the unit, said in the stock exchange filing.
Banks in Australia are simplifying products and trimming costs to overcome the slowest credit growth since 1977 as customers focus on savings. Westpac and its main competitors have cut jobs, frozen pay of top managers and moved roles to lower-cost countries such as India and the Philippines.
Westpac shares dropped 1 percent to A$30.70 as of 10:17 a.m. in Sydney, paring their gain this year to 18 percent. The benchmark Australian stock index fell 0.6 percent.
Stressed asset exposures at the Australian Financial Services unit dropped by A$1.2 billion ($1.3 billion) from 2010 to Dec. 31, 2012, according to today’s filing.
The unit includes the company’s retail and business bank, St George Banking Group and BT Financial Group. The division contributed A$4 billion in cash profit last year, more than 60 percent of the bank’s earnings, filings show.