- Westpac (WBC) has posted $1.58 billion in unaudited cash earnings in Q1 as it brings forward its restructuring plans to create a ‘simpler’ bank
- Unaudited statutory net profit of $1.82 billion was recorded, an 80 per cent increase on the quarterly average of 2H21
- The company also announced it has established a three year plan to reduce its cost base to $8 billion by 2024
- A key part of the plan is now being implemented to create a smaller, more focussed head office, reducing the size of corporate functions by around 20 per cent
- Shares were trading 1.92 per cent higher today at $21.00 each
Westpac (WBC) has posted $1.58 billion in unaudited cash earnings in Q1 as it brings forward its restructuring plans to create a ‘simpler’ bank.
The company reported an unaudited statutory net profit of $1.82 billion for the quarter, an 80 per cent increase on the quarterly average of 2H21.
Unaudited cash earnings were $1.58 billion, representing a 74 per cent increase, mainly driven by gains on assets and revaluations. Excluding notable items, however, it was up one per cent.
Expenses came in at $2.7 billion, a decrease of 26 per cent. This is reportedly due to a lower headcount and investment spending.
A key part of the plan is now being implemented to create a smaller, more focussed head office, reducing the size of corporate functions by around 20 per cent.
The restructure involves moving support services including HR, Finance, and Technology to the businesses and customers they support.
The company will create two shared services areas to achieve benefits of scale across common processes.
A lean Group head office will be responsible for setting strategy, policies, and frameworks for the Group.
Westpac will also restructure its management team so that the roles of Chief Risk Officer (CRO) and Group Executive, Financial Crime, Compliance and Conduct will be combined.
Chief Risk Officer, David Stephen and Les Vance, Group Executive, Financial Crime, Compliance and Conduct will leave WestPac.
Ryan Zanin has been appointed as Chief Risk Officer.
The company expects to incur a small restructuring charge in the first half of its results from this year, as well as additional charges in its Full Year 2022 results.
Westpac expects the outcome of this restructure to result in better customer outcomes, a more efficient head office, and a contribution to a 20 per cent reduction in head office roles over time.
Chief Executive Officer Peter King believes the changes will be positive.
“We are building a simpler bank, streamlining our organisation and lowering the cost of running the group,” he said.
“This is key to delivering better services for customers and better results for shareholders.”
The company’s net interest margin was 1.91 per cent, down eight basis point (bps) due to competition and higher liquid assets.
Total loans increased by 0.7 per cent over the quarter with growth across Australian mortgages, institutional lending, and New Zealand lending.
According to the company’s Pillar 3 report, its common equity tier 1 capital ratio was 12.2 per cent at the quarters end, 12 basis points lower than the previous quarter.
Risk weighted assets grew by 1.3 per cent, an increase of $5.8 billion over the period.
In an aim to reduce its cost base to $8 billion by 2024, the company has established a three year plan.
Shares were trading 1.92 per cent higher today at $21.00 each at 2.05 pm AEDT.