Westpac (ASX: WBC) is the latest Australian bank to defer its dividend due to COVID-19 uncertainty as its cash earnings and profit tumble.
At the end of 1H20 the bank has reported impairment charges of $2.2 billion, up $1.9 billion because of COVID-19 impacts.
Statutory net profit for the half is down 62 per cent to $1.2 billion, and cash earnings for the half dived by 70 per cent to $993 million.
According to Westpac Group CEO Peter King (pictured) the result is the "most difficult" the bank has seen in recent years largely due to the COVID-19 financial crisis and the role the bank has played in stabilising the broader economy.
Despite the results, Westpac remains well capitalised, with customer deposits up $19 billion over the half and funding metrics comfortably above regulatory requirements.
Westpac has also increased its provisions for expected credit losses to $5.8 billion, including $1.6 billion of additional impairment charges predominantly relating to COVID-19.
The group has also provisioned $900 million for a potential penalty relating to the AUSTRAC civil proceedings brought against it last November which are ongoing.
"We are continuing to lend to keep credit flowing in the economy and we have tailored relief packages to help consumers and businesses," says King.
"It is vital that when we get to the recovery phase businesses are ready to re-open and support as many Australians back into work as possible.
Westpac's board says deferring the decision on determining an interim dividend was difficult but necessary considering the uncertain economic and operating conidiations.
Looking forward King says COVID-19 is a once-in-a-lifetime health and economic crisis and believes the bank will be able to assist with getting businesses through to the other side of the pandemic.
"However, Australia still faces a sharp economic contracting in 2020 with a solid rebound not expected until the December quarter," says King.
"While the rest of the world is also facing significant economic disruption, Australia's exports will likely benefit from the recovery in the Chinese economy.
"Importantly, while the remainder of the year will still be challenging, Westpac is well placed to continue to support customers through this difficult time."
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