Westpac shares gain on improved results

The news: Australia’s second-biggest lender Westpac has posted a jump in full-year profit on the back of growth in key markets and lower expenses.

The numbers: Westpac said net profit rose to $7.2 billion for the year to 30 September, a 26% increase from the previous year and broadly in line with analyst expectations. Revenue was up 10% and the lender lifted its final dividend to 72 cents a share, from 64 cents a year ago. It also announced an on-market share buyback of up to $1.5 billion amid a strong capital position.

The context: Westpac said net interest margins, a core measure of bank profitability, rose 2 basis points to 1.95%, with its business and institutional banking units benefiting from higher interest rates, which also helped offset margin pressure in its consumer division. Chief executive Peter King flagged that impairment provisions had increased to “position the bank’s balance sheet appropriately for the uncertain economic outlook”. The lender last month flagged a $173 million hit to profits on account of restructuring costs and asset writedowns. It had earlier lifted dividends and boosted profitability in its half-year results announced in May.