Rebuilding Westpac’s public reputation will be the bank’s “biggest challenge” over the long-term, says chairman Lindsay Maxsted, who hopes the royal commission can help banks win back the community’s trust and respect.
A week after the government announced the powerful judicial inquiry into the financial sector, Mr Maxsted told shareholders on Friday the bank would cooperate with the probe, to be led by former High Court judge Kenneth Hayne.
Westpac chair Lindsay Maxsted. Photo: Nic Walker
He said he hoped the inquiry could ultimately have a role in “restoring trust, respect and confidence in Australia’s already strong financial system”.
Even so, he said improving the bank’s reputation after a tough couple of years, which included Westpac’s 200-year anniversary, would be challenging.
“As we begin our third century, our biggest challenge lies in rebuilding our reputationacross the communities in which we operate,” Mr Maxsted said.
“If we are to continue to prosper, we must ensure the needs of customers and communities are the priority and we must actively demonstrate the value we bring to society and the value we bring tocustomers every day.”
While the bank had viewed a royal commission as unnecessary, Mr Maxsted said it had last week changed its mind on a royal commission in order to end the uncertainty in the industry.
Reputation was also a key theme in remarks from chief executive Brian Hartzer, who said he hoped the royal commission could stop banks being attacked by politicians, even if it did uncover further problems.
“Banks have been a political football for too long. That’s why we have now accepted the need for a royal commission to create certainty and confidence in our banking system,” Mr Hartzer said.
“We are embracing the royal commission as a way to finally draw a line in the sand on calls for inquiries, and as an opportunity to tell our story, including the success of Australia’s banking system in navigating the GFC and providing vital support for Australia’s robust economy today.”
Mr Hartzer conceded the inquiry might find “issues” in the industry, but he hoped it would also show the bank was acting to resolve past problems, and investing in customer service.
Mr Maxsted’s opening remarks also highlighted the bank levy, which he said had seen the equivalent of 2¢ a share go to the taxman, after banks paid the levy for one quarter.
He said shareholders had absorbed the impost this time, but the bank had not reached a position on whether it would be passed on to customers in the future. The bank would continue to push for the scrapping of the “highly inefficient and distortive tax”, Mr Maxsted said.
Westpac has kept its dividend flat for the last four halves, and Mr Maxsted said higher capital requirements were a key reason for shareholder payouts remaining static.
After a 3 per cent rise in cash profit this year to $8.06 billion, he affirmed the bank’s view that the year ahead would involve slower growth in credit, amid a crackdown on lending to property investors and those with interest-only loans.