Australia's Westpac raising $1.7 billion as profit slumps, flags weak outlook

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Australia's Westpac raising $1.7 billion as profit slumps, flags weak outlook
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Westpac Banking Corp is looking to raise A$2.5 billion ($1.73 billion) from shar...

) is looking to raise A$2.5 billion from shareholders after reporting a 15% slide in full-year cash earnings, cutting its dividend for the first time in a decade and flagging weak trading conditions ahead.

“2019 has been a disappointing year,” Westpac Chief Executive Brian Hartzer said. “Financial results are down significantly in a challenging, low-growth, low interest rate environment.” The capital raising is the largest by a bank since Westpac’s own A$3.5 billion raising in 2015, according to Refinitiv data. Hartzer said the raising, most of which has been underwritten at A$25.32 per share, a 9% discount from Friday’s closing price, would provide flexibility amid the subdued economic outlook.

Excluding one-off items like the A$977 million hit for customer remediation, Westpac’s cash earnings dropped 4%. Only its New Zealand unit posted a rise, up 3%. “The decision ... was not easy,” Hartzer said. “However, we felt it was necessary to bring the dividend payout ratio to a more sustainable medium-term range given the capital raising and lower return on equity.”

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