Westpac Bank’s announcement that its earnings will rise and its loan quality is stronger than its peers, showed the caliber of the lender’s former chief executive David Morgan, according to an investment expert.
“It just shows what an excellent job David Morgan did with Westpac, he left it in the best shape of all the Australian banks at the present time,” Huntleys’ Newsletters founder Ian Huntley said.
Westpac’s cash earnings will rise by up to 8 per cent when it posts its full-year earnings on October 30, 2008, the bank’s market update to the Australian Securities Exchange (ASX) said on Friday.
In contrast, ANZ Banking Group and National Australia Bank’s have announced their recent bad-debt charges will dent earnings.
Westpac is vying to become the country’s biggest lender and Australia’s third largest dealer group by adviser numbers, by purchasing St George Bank.
“The only question I have of Gail Kelly is that she did a good job at St George, will she prove to be as good at a far larger and more complex bank,” Huntley said.
While Westpac’s asset quality remained strong, stressed loans have increased and may climb should Australia’s economy slow further, Westpac chief executive Gail Kelly said.
“Managing risk remains a priority for us and we are maintaining our strong lending and credit risk disciplines,” Kelly said.
Total bad debts for Westpac stood at $433 million for the six-months to March 31.
Westpac’s shares rose 40 cents or 1.7 per cent to $23.55 in trading on Friday.
