BT earnings drop 10%, planner numbers rise

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BT Financial Group (BTFG) may have seen its cash earnings take a dive during the 2011/12 financial year, but there are reasons for its financial planners to look on the bright side.

BTFG’s end of financial year figures were released as parent group Westpac announced an overall statutory net profit of $5.97bn for the year – a drop of 15% on the previous year’s result.

This decrease was “principally as a result of a large one-off tax benefit from St.George tax consolidation that was reported in the 2011 full year result,” said a Westpac statement, and the group’s CEO, Gail Kelly claimed that the this was “a strong result in a lower growth economic environment”.

“It reflects the progress we have made over the past five years in building a stronger, more productive and more customer focused company,” she added, before going on to praise the group’s Australian financial services (AFS) division.

“Revenue growth in AFS was pleasing, particularly in the second half. At the same, time expense growth was low despite ongoing investment in our wealth and banking distribution capabilities,” she said.

“BT Financial Group led the market in net market flows of funds onto its platforms and continued its strong insurance cross-sell.”

BTFG’s cash earnings were $653m for the year and, while this represented an annual drop of 10%, Westpac was quick to point out that earnings for the second half of the year were up 17% on the first half’s result ($352m vs $310m).

Lower asset markets, a reduced contribution from the equities business and the de-risking of its lenders mortgage insurance business all contributed to the 10% drop in BT’s 2011/12 cash earnings.

However, Westpac claimed that BTFG exhibited a strong underlying performance overall, and this was supported by further growth in its planner network and a strong result across life and general insurance.

“The division continued to lead the market in funds under administration flows and insurance and wealth cross-sell,” said the statement.

And it looks as if financial advice will prove to be a cornerstone of Westpac’s strategy going forward, as it continues to build on its strength in wealth through:

  • increasing focus on superannuation and insurance;
  • investing in developing a next generation wealth platform;
  • and increasing the number of advisers.

“We have a clear strategy in place and, as a result of the work we have undertaken in recent years, Westpac is in good shape,” said Kelly.

“Our balance sheet is strong and we are well advanced in repositioning our business for the slower growth environment. We will continue to deepen customer relationships, invest in growth opportunities and drive productivity. We expect our good momentum to continue.”

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