Australia’s Westpac mulls shareholder payback, to sell $734 million of notes

(Reuters) – Westpac Banking Corp (WBC.AX) is considering returning capital to shareholders as Australia’s post-pandemic economic rebound left big banks with record cash, and said it will raise about A$1 billion ($733.8 million) through a sale of notes.

The country’s early control of the pandemic last year drove property prices and credit growth higher, allowing the “big four” banks to return excess cash. Westpac has also sold assets to cut costs and focus on core operations.

The No.2 lender did not disclose a profit for the third quarter on Tuesday, but reiterated its expectation of lower margins for the second half and higher expenses for fiscal 2021.

Westpac said it would provide an update on its plans to return capital with its full-year results, and separately announced it would offer notes between Aug. 25 and Sept. 9.

It reported total impairment provisions of A$5.54 billion for the June quarter, including A$300 million for exposure to equipment financier Forum Finance Pty Ltd.

The bank last month filed a civil lawsuit against Forum Finance after discovering a potential fraud regarding equipment leases for its customers.

Its common equity tier 1 ratio, a closely watched measure of spare cash, was at 12% as of end-June compared with 12.3% at end-March.

As of Aug. 11, it had approved a total of A$1.6 billion in home loan balance deferrals for about 3,700 customers who had accessed COVID-19 emergency support since July.