Westpac warns of gloomier outlook

AUSTRALIA’S Westpac Banking Corp said its third-quarter cash profit jumped 27.3 per cent, but joined rivals in sounding a cautious tone about prospects amid rising costs, global uncertainty and lukewarm lending growth.

Australia’s second biggest home loan lender said third-quarter cash profit rose to A$1.4bn (£900m), just short of analyst expectations of A$1.5bn, but putting it well on track for a record annual profit.

But Westpac, which predicted further improvements in its businesses, also sought to cool expectations, saying a plethora of challenges clouded its outlook.

“Like all the banks, they’re talking about the increased cost of borrowing money in the global markets. That’s likely to have an impact going forward,” Peter Vann, a fund manager at Constellation Capital said.

Analysts added that while Australia’s banks need to raise lending rates to offset some of the higher funding cost, they risked a customer backlash if they moved too fast too soon.
“The Australian economy is robust but conditions in Europe and signs of slowing growth in the US continue to create global uncertainty,” chief executive Gail Kelly said.