The virus has led to a destructive profit drop. Picture: (AAP Image/Ellen Smith
The virus has led to a destructive profit drop. Picture: (AAP Image/Ellen Smith

Westpac profit plunges 70 per cent

Westpac's cash profit plunged 70 per cent in what was described as the "most difficult" result in many years as the cost of the coronavirus pandemic weighed heavily on the major bank.

Its interim cash profit lost nearly $1 billion for the six months to March 31 and it joined ANZ in deferring any dividend paid to shareholders.

NAB slashed its offering to those holding its stocks last week when it announced it would pay a dividend of just 30 cents per share following guidance from prudential regulator APRA that banks and insurers should seriously consider doing so until the economic outlook is clearer.

For comparison, Westpac paid 94 cents per share to shareholders in the first half of last year.

"This is the most difficult result Westpac has seen in many years," chief executive Peter King announced to the ASX this morning.

"It is significantly impacted by higher impairment charges due to COVID-19, as well as notable items including the AUSTRAC provision."

The coronavirus pandemic has decimated the financial sector with Westpac shares plummeting nearly 37 per cent so far this year.

Former interim chief executive Peter King took over the role on a permanent basis last month. Picture: Nikki Short
Former interim chief executive Peter King took over the role on a permanent basis last month. Picture: Nikki Short

 

On Thursday, ANZ Chairman David Gonski said the decision to hold off on paying a dividend was not a reflection of the bank's financial health.

He said ANZ had not received any concerns from APRA regarding capital levels.

"The board agrees with the regulator's guidance that deferring a decision on the 2020 interim dividend is prudent given the present economic uncertainty and that making a decision at this time would not have been appropriate," Mr Gonski said.

"This was a very difficult decision and the Board considered all options available as we understand the impact this will have on those shareholders who rely on dividends."

ANZ said it would "consider all factors" over the coming months and will continue to assess the evolving situation, including the severity of community lockdowns, before determining a final position on the interim dividend.

 

Originally published as Westpac profit plunges 70 per cent



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