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Banks not highly profitable: Westpac CFO

Stuart Condie  |  28 Feb 2018Text size  Decrease  Increase  |  
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SYDNEY - [AAP] Westpac's (ASX: WBC) chief financial officer has told the Productivity Commission that Australian banks are not highly profitable just because they make large profits.

Peter King told the commission's inquiry into competition in the financial industry that the $31.5 billion of profit amassed by Australia's big four banks in their last full financial year were due to their size and efficiency.

He took issue with the description of the big banks in the commission's draft report, which was released three weeks ago.

"Australia's major banks are not 'highly profitable' as the draft report indicates," Mr King said.

"It is true that, as a sector, we make large dollar profits, but that does not necessarily equate to being highly profitable."

He said Westpac's return on equity had fallen more than 40 per cent in the past decade due to higher capital requirements and increased compliance costs.

Westpac's return on equity fell from 22.3 per cent in 2008 to 13.8 per cent in the 2017 full-year results announced in November.

However, Westpac reported full-year cash earnings of $8.06 billion in 2017, more than double the $3.73 billion it made in 2008.

Cash earnings per share rose from 198.3 cents to 239.7 cents over the same period--an increase of 20.9 per cent.

That compares to basic earnings per share of 254.7 cents and 294 cents reported in 2017 by Coles supermarket owner Wesfarmers and biopharmaceutical giant CSL.

"The returns do not stand out compared to Australia's largest listed entities and are in line with other leading and comparable banking systems globally," Mr King said.

 

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© 2020 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

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