Westpac debt provision up

Press, 21 November 1987, Page 29

Westpac debt provision up

PA Sydney Westpac Banking Corp had made sufficient provisions for bad and doubtful debt to provide cover for losses in excess of sAustl billion ($NZ1.11B) in the unlikely event of a catastrophe, Westpac managing director, Mr Bob White, said yesterday. He was commenting on extra debt provisions announced when Westpac reported a 0.6 per cent increase in September year net operating profit to sAust4o9.2M (SNZ4S4M). The profit was after a rescheduled country debt provision of S7SM (SNZB3M). This took the general debt provision to J384.90M (SNZ427M) compared with 5236.96 M (SNZ263M) a year earlier.

Before the provision and capital gains on the disposal of properties totalling 533.4 M (SNZ22M) net profit was $413.2 million (SNZ422M). “With a strong capital ratio and general provision, Westpac is well placed to cope with the uncertainty created by the events of recent weeks,” Mr White said. He said the bank’s capital ratio was 6.9 per cent at the end of the September year, up from the previous year’s 6.82 per cent and above the Reserve Bank's minimum 6.0 per cent requirement. Group assets increased by 15.8 per cent to $70.38 ($78B). In a departure from previous accounting practices, ’Westpac included the capital profits on the disposal of properties as part of operating profits. A further change was the inclusion of profits from the sales of shares by subsidiary Australian Guarantee Corp Ltd as an operating profit instead of under extraordinary items. Mr White said Westpac s $142.04M (SNZIS7M) extraordinary loss mainly

comprised a J132.5M (SNZI47M) write-off of intangible assets arising from acquisitions. He said the latest year’s earnings were affected by a 48.1 per cent rise in tax to J397.63M (JNZ442M), reflecting increased Australian and New Zealand tax rates, the Australian fringe benefits tax, the run-off of investment allowances and a rise in the non-tax effected funding charge to provisions. Westpac was the last of the three major listed Australian trading banks to announce increased provisions for rescheduling country debt with their results for the year ended September 30, after National Australia Bank Ltd and Australia and New Zealand Banking Group.