Australia's oldest banking and financial services group Westpac Banking Corp (ASX: WBC) announced its full year results today, with profit up 7% on the same time last year to $7, 990 million, cash earnings up 3% to $8,062 million, and cash earnings per share up 2% to 239.7 cents.
The final fully franked dividend of 94 cents per share remains unchanged, making the full year dividend $1.88. The final dividend represents a payout ratio of 78.7% of cash earnings.
The bank has a strong balance sheet with a CET1 capital ratio of 10.6%, which is already above APRA's lofty benchmark of 10.5%, well in advance of the January 2020 deadline and the bank also met the net stable funding ratio (NSFR) ahead of the January 2018 deadline.
The profit was just under consensus expectations and the stock price is down.
"This is another solid result. We have continued to successfully navigate a challenging environment while our strategy builds momentum," CEO Brian Hartzer said.
The company's 'get it right, put it right' program to review customer service and products has been working well, with the company reporting increased customer satisfaction, employee engagement, and it has welcomed 1 million clients since 2015.
Of the five divisions the company has, Westpac New Zealand delivered cash earnings of NZ$970 million, up 9% over the last year mainly due to improved credit quality.
The institutional bank delivered an increase of 18% cash earnings to $1.3 billion due to a rise in customer transactions and market income.
BT Financial Group's (part owned by Westpac) cash earnings were down 6% to $771 million, due to lower earnings from infrequent items such as customer refund payments, higher general insurance claims, lower advice income and higher regulatory and compliance costs.
There were positive trends in FUM (funds under management) up 10%, and FUA (funds under administration) up 6%.
The business bank had an 8% increase in cash earnings to $2 billion thanks to disciplined growth and improved fee income.
Good balance sheet growth for the consumer bank saw cash earnings up 5% to $3.1 billion.
Brian Hartzer has avoided big cost cutting measures like the National Australia Bank Ltd (ASX:NAB), which released its results last week, announcing the planned cutting of 6,000 jobs.
While Australia and New Zealand Banking Group (ASX: ANZ) announced it was cutting investments and moving towards being a more simplified bank.
So the Westpac results have less uncertainty, which should please some investors.
