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Westpac boasts 138% FY21 net profit bump as 'outstanding issues' continue to be fixed

The red and white bank continued to digitise more services, such as its mortgage platform, implement policy improvements, and strengthen its financial crime practices.
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Written by Aimee Chanthadavong on

Westpac has reported that the company performed strongly for the 2021 full year as it continued to simplify its business and fix outstanding issues, such as IT complexity.

The red and white bank closed the 2021 financial year with net profit of AU$5.46 billion, a 138% increase over last year, while revenue came in 5% higher year-on-year to AU$21 billion.

"Despite another challenging period, cash earnings rose, the balance sheet remains strong, and I am pleased with our progress on making Westpac a simpler, stronger bank," Westpac boss Peter King told shareholders on Monday.

Total expenses came in at just over AU$13 billion, which King said was reflective of the bank directing more resources to fixing issues, including IT network and domain consolidation, customer process digitisation, and reducing third-party spend.

"We continued our focus on digital this year, launching a new Westpac mobile banking app to iPhone customers, with 1.7 million users," King said.

"In mortgages, we have further digitised processes and introduced more than 70 policy and process improvements, which contributed to faster approval times. Our digital mortgage origination platform peaked at 810 applications per week, and we have started rolling out this platform to mortgage brokers.

"We also implemented more than 100 policy and process improvements in business lending and increased automated credit decisioning, leading to faster decisions for customers."

For the full year ending 30 September 2021, Westpac had 5.24 million digitally active customers, up 3% year-on-year, while digital transactions increased 14% from 277 million to 316 million.

King also added that the bank continued to strengthen its financial crime practices with a rebuild of its processes and systems, pointing out that Westpac paid or offered over AU$1 billion to approximately one million customers as part of customer remediation. To date, Westpac has paid more than AU$1.5 billion in remediation.

"We are one year into our Customer Outcomes and Risk Excellence (CORE) Program, which comprises more than 300 activities to strengthen risk governance, accountability, and culture across the organisation," he said.

As part of its environment, social, and governance strategy update in September, Westpac reported it has managed to block some 24,000 transactions that were deemed as abusive payments.

The bank also noted it required 19,000 customers to change the language they used in transaction descriptions before their payments could be accepted and processed. It also issued more than 800 warning letters and account suspensions and reported more than 70 customers to authorities for abusive payments.  

Looking to FY22, Westpac wants to reduce its cost base to its AU$8 billion cost target as a result of completing programs under its Fix priority and realising benefits from divestments.

"We have made considerable progress in improving our mortgage and business banking performance, driven by streamlining of lending processes to create a better customer experience. This sets us up to maintain momentum in the year ahead," King said.

"We are also committed to resolving a number of outstanding regulatory issues where our actions were not good enough.

"We are making progress in strengthening risk management, growing our core franchise, and simplifying the bank, which provides a strong platform to deliver a better service to customers, as well as returns for shareholders."

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