by Tim Lohman

Westpac Credits IT with Performance Gains

May 06, 20093 mins
Financial Services IndustryRisk Management

Westpac has made major advances in the last half year in improving the reliability and stability of its in-house IT systems according to the bank’s CEO, Gail Kelly.

Speaking today at the announcement of its financial results for the quarter, Kelly said group executive, technology, Bob McKinnon — who was poached from the Commonwealth Bank mid last year specifically to lead a then newly-created technology division at the bank — was largely responsible for the improvements.

“Technology has been a big focus for us this half,” Kelly said this morning in a media conference call. “The Westpac systems environment is inherently very complex and subject to reliability issues.

“Bob McKinnon, who has been with us since last August, has significant strengthened the team and has introduced discipline, analytics and rigour into our IT environment so improving reliability and stability.”

McKinnon’s job has been made all the more difficult given his additional task of integrating the ICT systems of St George Bank — which Westpac agreed to buy mid-May last year, creating Australia’s second-biggest bank and largest provider of home loans.

However, according to Kelly, the bank had been actively working to drive the most value out of the combined entity to help it compete with banks such as the Commonwealth Bank and ANZ, both of which have made recent announcements about their heavy investments in IT.

“Under Bob’s leadership we have developed a strategy and an IT roadmap for the years ahead which is pragmatic and executable and which will drive further benefits from the merger,” Kelly said.

Westpac Group reported a pro forma cash earnings of $2295 million, down 6 percent for the six months ended 31 March 2009. Net profit after tax was down 1 percent to $2175 million for the six months ended 31 March 2009. Pro forma cash earnings per share of 82.4 cents for the first half 2009 was 16 percent lower than cash earnings per share for Westpac in the 2008 first half.

Kelly said that while it was disappointing to announce an overall decline in cash earnings, the group’s performance demonstrated that it had a strong, diversified and resilient businesses.

“We are also further strengthening our productivity focus,” she said. “Initiatives underway will begin to be reflected in our second half results but will be more pronounced in 2010. While seeking to reduce expense growth, we continue to prioritise key elements of our strategy, particularly investments to enhance customer service and develop our technology infrastructure.”