Australian Stocks Drop, Westpac Charges Rise

123jump.com Staff
18 Feb, 2009
New York City

Stocks in Australia dropped sharply after Wespac reported sharply higher impairment charges. Earnings fell 2% to A$1.2 billion in the three months to December on a pro-forma basis, while total lending rose 2.4% in the period driven by strong mortgage and business lending in Australia.

[R]3:00AM New York, 7:00PM Sydney- Wespac impairment charges rise A$800 million in the December quarter.[/R]

The benchmark Australian stock index declined after Westpac reported earnings declined 2% in the three months to December as impairment charges increased to A$800 million from A$441 from a year ago.

In Sydney trading ASX 200 index declined 1.5% or 51.1 to 3,413.20.

Of the ASX 200 index stocks, 45 rose, 141 dropped, and 14 were unchanged. Asciano Group led advancers in the index shares with a rise of 17.1% followed by Platinum Australia gaining 13%.

Westpac''s Impairment Charges Rise

Westpac Group reported today that the company''s earnings fell 2% to A$1.2 billion in the three months to December on a pro-forma basis, while total lending rose 2.4% in the period driven by strong mortgage and business lending in Australia.

However lending growth slowed in Westpac''s Institutional and New Zealand business.

Customer deposits rose 9.6% from the previous quarter.

In the period, impairment charges increased to A$800 million from A$144 million in the same period a year ago as provisions for three large corporate exposures advanced to A$360 million.

The asset quality in the corporate and commercial portfolio continues to drop in the wake of the deteriorating conditions on the global financial market.

Westpac also reported that its Tier 1 ratio stood at 8.3% at the end of December, excluding the effects of the recent retail Share Purchase Plan, which raised $442 million.

Westpac Group chief executive officer Gail Kelly said, """"With global economic conditions continuing to be volatile, operating conditions will remain difficult. However, Westpac is well positioned to meet the challenges ahead.""""

Australia’s Mineral Exports to Sustain Growth

The Australian reported that Reserve Bank of Australia''s governor of economics Malcolm Edey said today at a forum in Sydney demand for the country''s resources will continue to grow buoyed by demand from China and India.

However, short term effects from the global financial crisis will continue to affect the growth prospects of the world''s fastest growing economies.

According to Edey, """"China and India and other parts of the developing world have a long way to go to catch up and as they catch up they are becoming a bigger and bigger part of the world and that''s a very powerful influence in increasing global growth prospects"""".

Gainers & Losers

Asciano Group led advancers in the ASX 200 index shares with a rise of 17.1% followed by increases in Platinum Australia of 13%, in Fortescue Metals of 12.4%, in Sino Gold of 7%, and St Barbara Ltd of 7%.

Sino Gold increased as gold prices rose $23 to $970 per ounce.

Centennial Coal led decliners in the ASX 200 index shares with a decline of 22.2% followed by losses in CSR Ltd of 16.5%, in MacMahon Holdings of 15.4%, in ING Office Fund of 13.3%, and Goodman Group of 10.7%.

Financial stocks dropped. Macquarie Countrywide of 10.5% and Babcock & Brown of 9.4%