SYDNEY: Westpac Banking Corp has increased its buyback programme and handed investors a special dividend, helping to offset first-half profit that met analyst expectations as competition in mortgages weigh on the Australian lender’s key consumer business.

Net income fell 16% to A$3.3bil (US$2.2bil) from the previous year in the six months ending March 31, the Sydney-based firm said in a statement.

That compared with the A$3.3bil average estimate in a Bloomberg survey of analysts. The firm boosted its stock buyback by A$1bil.

“Overall, the Australian economy is proving resilient,” Westpac chief executive officer Peter King said in the statement. “We believe the economy is on track for a soft landing.”

King is grappling with an uncertain outlook just as traders and economists reassess the path for Australia’s economy, and expectations move away from more interest cuts to the potential for further hikes.

King said it is likely rates will stay higher for longer. Meantime, analysts have also expressed concern over succession planning for King, who has led the company for more than four years.

The bank will pay a special dividend of 15 Australian cents.

“While we’ve seen an uptick in stress in our loan books, this is to be expected given the large increase in interest rates, high inflation and taxation,” King said.

Westpac’s dividend yield tops Australian banks and most Asia peers if its first-half dividend, including special, and additional A$1bil buyback are incorporated.

Profit might still fall more than 10% this year, as margin weakens and costs remain sticky, although credit remains benign, said senior industry analyst Matt Ingram.

Last week, National Australia Bank Ltd said it plans to buy back A$1.5bil in its stock.

 - Bloomberg