Westpac CEO Cautious On The Future

Post by Sharat on May 11, 2009 · Under Australian Economy, Company News, banking, interest rates · Comment

Australian banking major and Australia’s largest bank by market valuation says it intends to behave cautiously in response to uncertain economic conditions according to Westpac chief executive Gail Kelly.

Last week the bank reported a drop in first half profits after having provide for rising levels of bad and doubtful debt which offset any growth that may have occurred in deposits and lending.

“Our whole settings of prudent risk management and caution is a very, very important element. I think it’s entirely appropriate right now in this time of the cycle and that’s exactly why we’ve sought to bolster our balance sheet.” Ms Kelly told ABC1′s Inside Business.

Ms Kelly went on to add that the bank’s capital raising strategy and provisions covering was about being conservative. Over the last six months, the company raised $4.7 billion.

Ms Kelly during the interview responded to analysts and fund managers querying whether Westpac’s vision of the future was particularly apocalyptic by saying,

“My answer’s been: `Really, no. It’s about caution, it’s about being prudent, it’s about having conservative settings because we don’t know just how difficult it might be.”

Westpac booked impairment charges of $1.611 billion ($1.611 billion) in the first half, more than tripling from $541 million the year before. It increased its total provision for impairment charges to almost $4.5 billion.

“Looking ahead, you know I think it’s going to be another quite tough six months and, certainly, we expect to see another period of high impairments,” she said.

During another interview with Sky News, Ms Kelly committed to guaranteeing passing on any future cuts in interest rates undertaken by the Reserve Bank of Australia, but declined to say whether customers would be able to receive the full extent of any future cut in official interest rates.

“We will work really hard to pass on as much as we can,” she said.

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