More Provisions Necessary Says Westpac

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This story features WESTPAC BANKING CORPORATION.
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The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS

By Rudi Filapek-Vandyck

Westpac ((WBC)) has updated the market this Friday morning indicating what everyone already suspected: there will be more provisions in the second half of this year due to “growth in lending, a modest rise in delinquencies and an expected further increase in its economic overlay provision”. Unfortunately, today’s operational update does not contain any more details.

The bank does point out stressed loans are increasing, adding stressed loans in the third quarter are at the same level as in the first half of 2008.

The bank does emphasise it believes to have a sufficiently strong capital and funding position to cope with the tougher economic environment. Westpac says it is maintaining “strong lending and credit risk disciplines”. The bank believes it has been growing faster than the market overall in both institutional and retail loans, but concedes growth in this market segment is slowing.

The bank reports it is on track to deliver 2008 cash earnings growth of between 6% and 8%, in combination with revenue growth of 8% to 9% while expenses are expected to grow 6% to 7%. The merger (read: takeover) with St George Bank ((SGB)) should go ahead.

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