Anz buy?, page-6

Yeah its TRUE.

Sorry for those LONG

Heres the articule couresy of the AFR

Westpac warns on earnings
Aug 1 18:18
Damien Lynch and wires

Westpac Bank on Thursday said it could struggle to meet forecasts for double-digit earnings per share (EPS) growth in the second-half of the 2001-02 financial year, but insisted that the outlook for 2003 remained positive.

Westpac's chief financial officer, Phil Chronican, had said earlier in an investor presentation that the bank expected to achieve revenue growth of up to 7 per cent in the second-half of 2001-02, subject to global economic conditions.

He also forecast strong cost savings for each of the next four financial years.

Mr Chronican said a loss of earnings from the sale of the AGC business and a lower-than-expected contribution from Westpac's funds management business - due to weaker equity markets - would combine to affect earnings-per-share growth.

Westpac in May confirmed the sale of its consumer finance arm to GE Capital for a profit of at least $750 million.

Westpac reached agreement on the sale of AGC in both Australia and New Zealand for $1.65 billion, and said this would yield a net profit in the second-half of 2001-02 of $750 million.

"While we haven't completely given up on achieving double-digit EPS growth, that would now be seen as stretching and probably the upper end of the expected range in the current period," he said.

"We continue to have confidence in the 2003 outlook because we think the underlying business trend is still in good shape."

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Mr Chronican said the main threat to the bank's earnings outlook was a possible downturn in the global economy, which could have a negative knock-on affect on the domestic economy.

"If the Australian economy continues to grow at about 3-4 per cent ... we see few reasons why 5-7 per cent revenue growth would not be achievable," he said.

Mr Chronican said the bank expected to achieve progressive cost savings of $63 million in this financial year. He said cost savings would increase to $199 million by 2003, $247 by 2004 and $278 million by 2005.

Under chief executive Dr David Morgan, Westpac has concentrated on cost control and outsourcing to improve its efficiencies. Westpac has in the past two years outsourced about 20 per cent of its annual cost base.

In an indication of its aggressive approach to cost reduction, Westpac in May reported another sharp decline in its ratio of expense to income from 52.2 per cent to 49.4 per cent, and well down from nearly 60 per cent three years ago.

Prior to the company's earnings warning, Westpac's shares closed unchanged at $15.25 .



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