Westpac announces new buyback, special dividend as profit slumps

May 6 (Reuters) – Australian bank Westpac (WBC.AX), opens new tab raised its share repurchase programme by A$1 billion ($661 million) and declared a special dividend on Monday citing a strong balance sheet, even as its first-half profit fell 16% on tight competition and high costs.

Traditionally beneficiaries of rising interest rates, the country’s so-called Big Four lenders have spent the past year sacrificing margins to write new home loans and paying more to depositors, narrowing their closely watched “net interest margin”.

Westpac’s net interest margin slipped to 1.89%, down 7 basis points from a year earlier, while net interest income remained largely flat at A$9.13 billion.

Its consumer division, which writes just over a fifth of the country’s mortgages, reported a 32% drop in its first-half profit to A$1.08 billion owing to competition.

As a result, the country’s No. 3 lender by market value posted a net profit of A$3.34 billion, below last year’s, opens new tab A$4.00 billion. That slightly missed Visible Alpha consensus estimate of A$3.43 billion compiled by UBS.

Source: REUTER