Westpac Chief Warns Of Continued Credit Crunch

Post by NeilMc on November 4, 2009 · Under Australian Economy, Business News, Capital Markets, Company News, banking · Comment

Australian banking major Westpac, has warned that if regulators over react to demands for larger bank capital and liquidity requirements, in response to the global financial crisis, another global credit crunch may occur.

The Sydney based lender, announced an 8 per cent fall in annual profits to $4.6 billion, and said that credit impairment charges had likely peaked during the June quarter, but also warned that 2010 would remain challenging.

Westpac chief executive Gail Kelly said that global banking regulators face a delicate balancing act in their response to the financial crisis.

“I’m hopeful we’ll work it through; I think we will get it right. We can’t afford to not (get it right).” Mrs. Kelly said

Westpac is the last of the Big Four banks to report its 2009 profit.

The Westpac chief said that though business conditions had improved, uncertainty in global markets remained, and the recovery was likely to be gradual.

“Credit growth is expected to remain relatively subdued as the impacts from the financial crisis continue. Average funding costs are expected to continue to increase as the intense competition for retail deposits remains, and as wholesale funding is sourced at a cost well above pre-crisis levels. In addition, as government fiscal support continues to be scaled back and interest rates move upwards from their very low emergency settings, ongoing caution is likely to be applied to business and consumer budgets.” Mrs. Kelly said.

Compare Australian Credit Card Deals