Westpac ramps up cost-cutting measures


Westpac Banking Corp. aims to reduce its costs by almost 40% by cutting back on non-core businesses. This could lead to more insurance businesses being abandoned in Australia and New Zealand.

The Sydney-based financial services group posted triple earnings growth over the past half year as the Australian economy recovered from COVID-19. The gain of AU $ 3.54 billion (NZ $ 3.81 billion) compared to AU $ 993 million a year ago was credited to a reversal in impairment charges. Westpac posted an impairment gain of AU $ 372 million in the first half of fiscal year 2021, after posting a loss of AU $ 2.24 billion in the first half of 2020.

According to a report by S&P Global, Westpac, Australia's third largest bank, plans to cut its costs to AU $ 8 billion by 2024, from AU $ 12.7 billion in the last fiscal year that ended in September 2020.

The group has announced its intention to leave non-core businesses and focus on banking. The sale began when Westpac sold its general insurance businesses to Allianz. Other divestments include Westpac Vendor Finance, which was sold to Angle Finance, and Westpac Lenders Mortgage Insurance, which was acquired by Arch Capital.

According to CFO Michael Rowland, specialty business divestments account for nearly AU $ 750 million of the group's cost base.

"The companies in which we have announced exits make up around 12% of that figure on a remarkable basis," Rowland told analysts and reporters on a May 3 earnings call.

In addition to shedding non-banking activities, Westpac will reduce the number of branches in Australia and New Zealand by 49 and plans to downsize its ATM network by around 3%. Several job cuts are threatened at headquarters, and office space has been reduced by 20%.


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https://businessservicesnews.ca/westpac-ramps-up-cost-cutting-measures/

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