Mood undercuts WA lending growth

Bankwest has declared home loan growth across the banking industry to be "possibly" at its lowest ever, compounding a business sector that remains sapped of all confidence.

But the Commonwealth Bank-owned WA institution, which yesterday reported a 6 per cent rise in full-year profit to $561 million, said it had not been making it more difficult for business customers to borrow money.

Bankwest's insistence counters a frequent complaint among businesses that banks in general are tightening their loan requirements, often making it all but impossible to secure credit.

Bankwest managing director Rob De Luca said this was not the case for his bank.

"What we have continued to see it's not declining applications that we have seen change over the past few years, it's been a (lack of) appetite for businesses as they have been concerned about the outlook and continued to deleverage," he said.

"I sit here and can say 'are we tightening anything, are we changing the way we look at businesses, no'. We continue to look at every business on their own merits and every personal application on its own merit, it's just more of a confidence level."

Mr De Luca said he was pleased with the profit given a year of tough trading conditions punctuated by industry-wide home loan growth of less than 5 per cent and business lending growth of close to zero.

Bankwest's home loan growth was 4 per cent, to $52.7 billion at June 30. Business lending fell 10 per cent, in part because Bankwest has continued to run off bad loans inherited when CBA bought the WA institution in late 2008. Savings deposit volumes fell 3 per cent to $9.3 billion amid fierce inter-bank competition.

Highlighting management's focus on cost control to offset low growth, Bankwest said operating expenses had dipped 3 per cent to $825 million in the year to June 30. Total banking income rose just 5 per cent to $1.75 billion.

Bankwest's cost-to-income ratio fell from 51 per cent to 47.2 per cent. Mr De Luca said it was the first time in Bankwest's history the ratio had fallen below 50 per cent on a full-year basis.

He attributed the achievement to operational efficiencies including from the bank's move into its new head office - consolidating five offices - as well as an undisclosed cut in staff numbers.

Bankwest contributed 7.2 per cent to CBA's after-tax cash group profit of $7.8 billion, which was another record for Australia's biggest lender.

Mr De Luca said he was not concerned that Bankwest's level of home loans in arrears was above CBA's average, declaring his loan book in good health.