Bank profits boom on impariment write-backs

Several things are working in favour of rising bank valuations favour now. The first is the steepening yield curve which always drives a bid for financials given it represents greater interest income for a borrow short, lend long business. The second is highlighted at Banking Day:

Westpac booked an impairment benefit of A$501 million in the December quarter, which helped it produce a net profit of $1.9 billion for the quarter – well ahead the quarterly average in the September half last financial year.

The bank said the impairment benefit was a result of the improved economic outlook and improved asset quality. It cut its expected credit loss provisions from $6.1 billion in September to $5.5 billion.

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