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Investing.com-- Australian lender Westpac Banking Corp (ASX:WBC) clocked a 2% drop in its annual profit on Monday amid higher operating costs, and announced a deal to sell its RNS mortgage portfolio as part of an ongoing restructuring.
Net profit after tax fell to A$6.99 billion from A$7.11 billion a year ago, the company said in a statement. But the figure was higher than Reuters estimates of A$6.83 billion.
Westpac also said it will sell its RAMS mortgage unit– worth at least A$21 billion– to a consortium including Pepper Money, KKR, and Pimco.
The sale will be at a “slight premium to the gross loan value of the portfolio,” Westpac said, adding that a loss on sale was expected.
Westpac’s year-on-year drop in profit was largely driven by higher operating costs, as Australia’s third-largest lender grappled with a tougher operating environment.
While net interest income grew 3% to A$19.47 billion, it was offset by a 9% increase in operating expenses. The bank’s spending on an ongoing restructuring, technological development, and higher wages all contributed to increased costs.
Non-interest income rose 5% to A$2.99 billion, aided by strength in Westpac’s institutional unit.
Westpac declared a final dividend of 77 cents per share, up from 76 cents a year ago.