Westpac ditches dividend

Westpac unaudited cash earnings for 3Q20 were $1.12 billion, higher than the first-half quarterly average of $497 million due to lower impairment charges. Excluding notable items, cash earnings rose 19 per cent.

However, the bank will not pay a first half 2020 dividend due to its desire to “retain a strong balance sheet” and “ongoing uncertainty in the operating environment”.

“Westpac’s priority has been to remain strong so we can continue supporting customers through this challenging period,” said CEO Peter King. “We have maintained our strong balance sheet and increased provisions for bad debts to support our prudent approach to managing impairments.

“Our third quarter 2020 result excluding notables is higher than first half average, mostly due to lower impairment charges. Nevertheless, the impact of the COVID-19 pandemic is clear as activity fell and margins declined.”

Westpac’s common equity tier 1 (CET1) capital ratio was unchanged at 10.80%. Stressed assets were higher from some businesses being downgraded, particularly in high-risk sectors, and mortgage delinquencies increased to 149 basis points.

Westpac has also seen a fall in mortgage deferrals, from 135,000 (worth $51 billion) to 78,000 (worth $30 billion).

“We continue to offer deferral support where needed, although following our three month customer check-ins the number of outstanding mortgage deferrals is down around 40 per cent,” Mr King said. “However, many mortgage and business customers continue to require assistance and we are committed to supporting them.

“While the domestic and global outlook remains highly uncertain, Westpac continues to be well positioned to support our customers.”

Westpac has opted not to increase its provision for the AUSTRAC matter.