Westpac Banking Corporation (WBC) said as a result of solid growth and high quality portfolio, it was on track to deliver 2008 cash earnings growth of between 6% and 8%. The bank said it was well positioned in the current environment to pursue its strategic agenda, including completing the proposed merger with St George Bank Limited (SGB).
Despite the more difficult economic conditions, Westpac said it anticipated robust revenue growth of 8% to 9% but said expenses were also expected to grow 6% to 7%.
Australia's fourth largest lender said that while loan volumes continued to slow at both the institutional and retail level, Westpac had grown ahead of its competitors.
"Housing lending has been particularly strong, growing at 1.5 times system," Westpac said.
Westpac added that asset quality remained good although, consistent with the economic cycle, stressed loans had increased.
"Within the Institutional Bank there were no new impaired assets in the third quarter."
According to Westpac its total impaired loans were at similar levels to the first half of 2008.
"Westpac's conservative risk profile has meant it is not at risk from the types of significant write-down in securities portfolios that have impacted some other financial institution," the bank said in a statement.
Chief executive officer Gail Kelly said that despite slowing economic growth, Westpac continues to perform well.
"Managing risk remains a priority for us and we are maintaining our strong lending and credit risk disciplines. Importantly, Westpac also has a strong capital and funding position, allowing us to effectively respond to the more difficult operating environment," Mrs Kelly said.
"We are not distracted by problems in our credit portfolio, enabling us to focus on our strategic agenda."
Given the challenging economic environment, Westpac said it expected higher collectively assessed provisions for the second half as a result of growth in lending, a modest rise in delinquencies and an expected further increase in its economic overlay provision.
In the fiscal 2008 first half, Westpac posted cash earnings growth of 10% to $1.839 million.
At 1017 AEST, Westpac was trading down 35c at $22.80.