Australian banking major Westpac has reported a whopping 25 per cent drop in first half net profits 20 $2.97 billion.
Westpac blamed the poor performance on an increase in bad debt provisions, and costs that resulted from establishing the Bank of Melbourne.
Westpac delivered a net profit of $3.96 billion during the same time period in the previous year, with analysts forecasting an average estimate of $3.11 billion.
Westpac said that whilst the European debt crisis had resulted in significant volatility and uncertainty during the first half, financial markets were increasingly exhibiting stability.
Despite the positive assessment, and signs of improvement in the United States and Europe, Westpac warned the recovery was still fragile.
Australians have also remained cautious, paying down debt and opting to save cash instead.
“Funding costs are expected to remain elevated, with competition intense, particularly for retail deposits,” Westpac said.
“Lending growth is likely to remain modest.”
Cash profit at Westpac, which is the most closely watched measure of performance stood at $3.195 billion, which was 1.0 per cent higher than the same time in the previous year.