Westpac initiatives lead to bumper profits

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Westpac Group today announced cash earnings of $3.5 billion for the six months to 31 March 2013, up 10% compared to the same period last year.

The Group’s wealth management business, BT Financial showed cash earnings of $205m, down 2% from $215m reported for the September 2012 half, but up 15% from the March 2012 half.

It benefitted from strong flows onto platforms, growth in superannuation, stronger financial planning revenue and a further rise in insurance premiums. But was offset by seasonally higher insurance claims.

Non-interest income for Westpac was up $247m (9%), with wealth management and insurance income rising $133m. The Group said this reflected the combination of improved cross-sell and stronger markets supporting higher funds under management (FUM) and funds under administration (FUA) balances.

The group intends to target higher growth areas including the prime of life (over 45 years old) segment and the wealth and Asian sectors.

Westpac Group Chief Executive Officer Gail Kelly said, “The operating environment continues to be challenging, with subdued lending growth.

"However, in line with our strategy, we are actively targeting opportunities in higher growth areas where conditions are more favourable such as deposits, wealth, trade finance and natural resources. We are being disciplined in our approach, balancing growth, productivity, returns and strength. We are particularly pleased with the improvement in ROE, which now stands at 16.1%.”