Strong financial result positions Bankwest for future investment

Wed Aug 10 08:30:00 WST 2011

Highlights of 2011 Results:

Bankwest cash net profit after tax for the year ended 30 June 2011 was $463 million, up significantly from the $45 million loss in the prior year. The improved performance was driven by a 12 percent increase in operating performance and lower loan impairment expense.

Key drivers of this performance were:

• Banking income increased to $1,640 million, up 5 percent compared to the prior year, mainly due to improved deposit margins and above system home loan balance growth;
• Operating expenses decreased by 1 percent from the prior year due to a continuing focus on discretionary expenditure and efficiency gains from the integration of processes with CBA. The expense to income ratio, now at 53 percent, continued to improve;
• Loan impairment expense (LIE) decreased to $109 million, which was 86 percent lower than the prior year due to the non-recurrence of property related impairments that impacted the prior year;
• Customer satisfaction scores were up in both Retail and Business, with the Retail score increasing 4.7 percent to 83.6 percent at June 2011(1); and
• Disciplined adherence to key strategic priorities since acquisition by CBA.

Results:

Bankwest has announced a cash NPAT of $463 million for the full year ending 30 June 2011, up from a $45 million loss in the previous year. This performance was supported by an increase in banking income to $1,640 million, up 5 percent compared to the prior year and a reduced LIE of $109 million, 86 percent lower than the prior year. Operating expenses also decreased by 1 percent. The expense to income ratio improved to 53 percent. The decrease in operating expenses reflects an ongoing trend, with lower expenses recorded every year since acquisition by CBA. Lending balances increased 1 percent on the prior year, with the increase in home lending partly offset by the strategic run-off of low quality and complex business lending. Deposit balances increased 2 percent on prior year.

Customer Satisfaction:

Customer satisfaction remains a core strategic objective for Bankwest. A number of initiatives during the financial year supported an improved customer satisfaction performance, including:

• The continued reinvigoration of the Bankwest brand in Western Australia (WA), with new WA-specific marketing strategies;
• Further investment in the WA branch network, with four new branches, 38 branches refurbished and innovative new customer concepts such as an Express Kiosk;
• The implementation of a Drought Assistance Initiative to support WA Rural & Regional customers who were impacted by record low winter rainfalls in 2010; and
• The successful launch of new internet and mobile phone banking services.

The success of these initiatives was reflected in:

• Winning the AFR Smart Investor 2010 “Bank of the Year Award”;
• An outstanding achievement award from the International Interactive Media Council for the new public website;
• Five products receiving gold awards in Money Magazine’s 2011 Best of the Best Awards, including “Best Everyday Branch Access Account” and “Cheapest Business Transaction Account”;
• The CANSTAR CANNEX 2011 “Innovation Excellence Award” for the Business Zero Transaction Account; and
• An improvement in both Retail and Business customer satisfaction.

Commentary:

Commenting on the results, Bankwest Managing Director Jon Sutton said: "It is encouraging to see this strong result, marking a turnaround in Bankwest’s performance. We are beginning to see a positive return on a number of initiatives and significant investment we’ve made, all aimed at improving levels of customer satisfaction.”

“The starting point was understanding the needs of our customers. With these firmly in mind, our focus has been to strive for operational excellence, investing in and delivering the product and service innovations necessary to continue to meet and exceed customer expectations. We’ve also invested heavily in the improvement of our distribution network, refurbishing a significant number of our WA stores and re-energising our award winning website.”

“I’m particularly pleased we’ve made progress with a number of key partnerships in the West Australian community, including a major sponsorship of the West Coast Eagles. These investments and improvement in our financial performance have all been made possible by the consistent execution of the strategy we implemented following acquisition by CBA.”

"Overall, our strategy is delivering for our shareholder, but most importantly for our customers. We will continue to invest in our business and build on the more than 115 years heritage we already have in WA."

(1) Source: Roy Morgan Research six months rolling average Main Financial Institution score.

-ENDS-

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