SYDNEY, AAP – Westpac boss Peter King expects continued strong demand for loans as the Australian economy reopens from the pandemic, but it is not all good news for the bank.
Mr King on Wednesday told the bank’s annual general meeting the Australian and New Zealand economies continued to perform well, leading to low unemployment and good credit quality.
However, low interest rates and intense competition would reduce profit margins, he said.
Australia’s cash rate, which influences how cheaply banks can borrow from the Reserve Bank, remains at a record low 0.1 per cent.
Westpac continues to deal with the fallout from poor risk management that allowed child abuse groups and others to shift money overseas.
The bank has made costly upgrades to systems to better monitor the movement of money.
Mr King said many shareholders expressed disappointment with the risk issues and the size of the investment required to fix them.
He said Westpac has a target of reducing costs from $13 billion to $8 billion by the 2024 financial year.
Australia’s second-largest lender in November reported full-year cash earnings more than doubled to $5.35 billion.
The bank recovered money set aside for COVID-related loan losses that did not occur.
Shares in the bank on the ASX were up 0.72 per cent to $21.08 at 1053 AEDT.