Westpac posts $1.1 billion profit in June quarter, Shares fall: Economy Roundup

Westpac has recorded earnings of $1.1 billion for the June quarter, with the lender pinning the results on growth in the local mortgage market.

But the bank’s impairment charges increased by 6%, or $54 million, to $865 million, up from $811 million during the previous quarter. Its total lending increased by 1.3%, with deposits growing by 2.3%.

Chief executive Gail Kelly said in a statement to the ASX that despite harsh economic conditions, the bank is continuing to perform well.

“The third quarter has shown some early encouraging signs of improvement. In particular, stronger business and consumer confidence and better than expected growth in China are assisting the Australian economy,” she said.

“At the same time, however, we believe it appropriate to remain cautious, recognising the pace of any recovery is likely to be slow, and that we still face some challenges particularly on the employment front.”

The Government’s Future Fund has reduced its stake in Telstra to just 10.9% from 16.4%, with the shares sold at a 4.9% discount to Telstra’s closing price.

“The sell-down is in line with the board’s previously stated plan to reduce the portfolio’s holding in Telstra in an orderly manner over the medium term and to build a portfolio consistent with its long term mandate and strategy,” the Future Fund said in a statement.

“The board took the view that current market conditions were conducive to a partial sell-down of the holding.”

Shares lower despite Wall Street rises

The Australian share market has opened lower today, dragged down by banking shares, despite positive results in the US where investors were encouraged by encouraging manufacturing data.

The benchmark S&P/ASX200 index was down 62.8 points or 1.43% to 4314.7 at 12.00 AEST. The Australian dollar has also moved higher to US83.

Commonwealth Bank shares have fallen 0.6% to $44.69, with NAB shares dropping by 2.1% to $26.30. ANZ fell by 1.4% to $19.35, while Westpac also fell by 1.4% to $22.98.

Surf wear retailer Billabong has recorded a 13.2% decline in full year net profit, and expects profit during 2010 to be flat.

The company’s net profit fell to $152.8 million from $176.4 million, with shares increasing 7.77% to $9.42 after the announcement.

“Given the lack of retailer confidence, the steep slowdown in consumer spending in various global economies and the extreme volatility in exchange rates, the company has emerged in remarkably good shape,” chief executive Derek O’Neill said in a statement.

Chinese GDP to grow in third quarter

Overseas, the Chinese government has forecast the country’s GDP to grow about 8.5% in the third quarter on an annual basis, but the consumer price index is predicted to fall about 1.3%.

Additionally, the China Securities Journal has published that exports are expected to fall 20% in the same quarter, with imports expected to drop by 12.7%. The publication wrote that China is in a deflationary state, and that current economic conditions do not require a change in monetary policy.

In Switzerland, the Government has sold its stake in UBS for $US5.1 billion, one day after it agreed to hand over thousands of names to US government officials as part of a tax-avoidance investigation.

Government authorities claimed the deal shows UBS has now secured its future following troubles during the credit crisis, with analysts also claiming the sale could signal the bank’s recovery.

In the US, Wall Street recorded positive results for a third consecutive day with new factory data showing activity in the mid-Atlantic region turned positive in August, after 10 consecutive months of contractionary activity.

The Dow Jones Industrial Average gained 70.89 points, or 0.76%, to at 9350.05.