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Westpac profit jumps but warns economic growth and house prices to fall

Business

Westpac has produced a $3.2 billion half-year profit, a 63 per cent increase on the previous half year as the bank said the housing market was already showing signs of slowing.

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The result was down 12 per cent on the same time last year which it attributed to increased competition. A dividend of 61 cents was declared.

Chief executive Peter King said rising interest rates were expected to lead to a reduction in house prices next year.

“I’m pleased with our progress on costs which are down 27 per cent (or 10 per cent if notable items were excluded), compared with the second half of 2021,” King said.

“This includes a reduction in head count of more than 4000 as we track towards our target of an $8 billion cost base by 2024.”

The bank has forecast a sharp reduction in Australia’s economic growth next year. It has predicted the economy would grow by 4.5 per cent in 2022, but 2.5 per cent in 2023.

Credit growth was expected to remain strong at 5.7 per cent this year and slow to 4.3 per cent next year.

“Demand for housing has already shown some signs of easing and rising interest rates are expected to contribute to a moderation in house prices next year,” King said.

 

 

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