Westpac’s weak result could signal bottom of the bad debts cycle

Omkar Joshi from Watermarks Funds says that Westpac’s first half report is “a weak result driven by lower bad debts but with no growth in cash earnings or underlying profit.” Joshi says while “Bad debts have continued to decline, with the bad debt charge remaining at a cyclical low point of 11bps” he is concerned that loans more than 90 days past dues have increased by 7% in the half. “This potentially indicates we are at the bottom of the bad debts cycle and that bad debt charges need to move higher from here. WBC has continued to reduce its provision coverage in the period.”


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