Westpac warns of global credit crunch risks

Gail Kelly stated that 2010 would yet be another tough year after announcing the 8% fall in annual cash profit to $4.6 billion. The chief executive of Westpac had also signalled that in the June quarter, loan impairment charges had rose sharply.

In response to the financial crisis, Mrs Kelly had highlighted the sensitive task for global regulators.

According to her, it seems that Westpac would be hoping on working on the situation and getting it right to suggestions that a credit crunch could eventuate as they couldn't afford the consequences if results turn out to be otherwise.

Among the Big Four banks to report its 2009 profit, Westpac is the last.

Besides, though the operating environment had improved, Mrs Kelly had commented that where global markets are concerned, there were constant doubts and recovery would most probably be gradual.

Furthermore, Westpac predicted that due to the continuation of the financial crisis impacts, credit growth would most likely remain relatively subdued.

Mrs Kelly also stated that with the scaled back of government fiscal support, and the increasing interest rates from their initial very low emergency settings, ongoing caution is probably to be practiced when it comes to consumer and business budgets.

It was clear that there's deterioration in asset quality with impairment charges hitting $3.29 billion which is $2.09 billion higher.

The bank explained that credit quality had begun to stabilise in the 4^th quarter. Also, over the last six months, consumer delinquencies had improved considerably.