The new push by the Westpac Banking Corporation to improve productivity is likely to result in job losses and outsourcing overseas. In order to achieve revenue growth amid weak loan demand and the consumer confidence, the bank plans to reconfigure its back office and IT structure. The Chief Executive Gail Kelly stated the they are certainly recognize the new reality of banking. They are into a slow growth of period and they expect that is going to be continued in the period to come. They are not going to go back to the environment of the pre-global financial crisis and they need more productivity to actually drive appropriate returns and sustainable returns to shareholders.

For the three months to June 30 of $1.55 billion fall two percent on the average of the first and second quarters, slow credit demand saw Westpac’s cash earnings. On the same period last year, cash earning were up 11 percent. The income rose 1.5 percent in the quarter, expenses were flat and impairment charge rose. More of the details on the new productivity plans that will come when the bank releases its  full year profit in November, more of the details on the new productivity plans that will come. Mrs. Kelly says that the staff numbers were increasing in some areas, including the newly launched Melbourne Bank and changed frequently in Information Technologgy and technology areas. The Westpac CEO also hinted that at some jobs moving offshore. It is clearly that involves sourcing some services from some players that are onshore and some players that are offshore.

The Westpac shares were down 95 cents or 4.5 percent at $20.22 at 1345 AEST and its rivals were down by between 1.3 and 1.8 per cent. The analyst said that  the full year profit forecasts for Westpac could now need to come down slightly, while the rise in impairment charges was a concern and the net interest margin was lower than those of its rivals. The City Index Chief analyst Peter Esho says that the Westpac needs to convince the market, it can navigate these headwinds in the next few months for 2012 numbers to remain unchanged. The bank’s third quarter net interest margin of 2.12 percent was up four basis points from the first half’s figure of 2.08 percent after the excluding volatile and one-off items. The impairment charges were higher than the previous quarter at around $300 million.

In Westpac’s institutional bank and New Zealand operations has bad debts charges that fell in Westpacs, but rose in the retail and business bank and St George Bank. The mortgage delinquencies of 90 days or longer increase to 59 basis points at June 30 up three basis points in the quarter. There was a fall in 30 plus days delinquencies of 17 basis points, partly due to an easing of the disruption borrowers felt from natural disasters.

REFERENCE:

http://www.news.com.au/business/westpac-likely-to-cut-jobs-and-outsource/story-e6frfm1i-1226116065597