Westpac Claims the Financial Crisis is over

Submitted by Jim Thesiger on 17 February, 2010 - 06:41

Gail Kelly, the chief executive of Westpac (WBC) claimed that the worldwide financial meltdown is over. Her declaration came after Westpac- one of the largest banks of Australia saw its cash profit climbing up 33 percent to as much as $1.6 billion for the first quarter due to a sharp fall in bad debts. In her statement Mrs. Kelly said, it seems the worst of the financial crisis is over although the company is monitoring the development closely. She also stated that the economic rebound is reflected in the drop in impairment charges and commercial property outlook is seeing improvements.

The recent development gave a major boost to the Westpac shares with the bank gaining $1.44 or 6.18 percent to the stock price, one of the biggest one-day gains for Westpac. This has also motivated strong buying in two other banking giants of the country- ANZ and National Australia Bank (NAB), where both the banks gained 3 percent on expectations that their results will also improve due to the improving economy. It is to be mentioned that a sharp fall in the impaired loans of Westpac, particularly the corporate loans helped it to boost profit. The result is going to put more pressure on the bank to keep the next increase in interest rate restricted according to the decision made by the Reserve Bank after it continued to increase the rates by closely to double the official move during the month of December.

While talking about the bank rates, the treasurer of Australia Wayne Swan stated that the Australian banks needed to ensure that the future rise of rates was not exceeding the actions taken by the Reserve Bank. Mr. Swan also said, any bank going for raising the interest rates further than the movements decided by the Reserve Bank cannot be justified and he expects the community to react strongly against such actions like they did last year to banks who went for increasing interest rates more than the official RBA raise.