WESTPAC chief Gail Kelly declared she is prepared to draw a line in the sand over the the bank's profitability, declaring the lender will be prepared to forgo lower-returning business for areas of faster growth.
The comments came as Westpac delivered a 5 per cent lift in full-year cash profit to $6.6 billion, buoyed by a revitalised retail banking arm, tighter costs and a boost in markets-related trading income.
Mrs Kelly said yesterday she was unwilling to let the bank's profitability fall back to the levels seen in the midst of the global financial crisis, with a key profit measure return on equity to remain above the critical 15 per cent mark.
"We've put a line in the sand about making sure we maintain our [return on equity]," Mrs Kelly said.
"We're directing our effort and energy where we believe we can get the best returns."
This will see Westpac making more aggressive moves into areas such as attracting retail deposits, superannuation and trade finance.
It will also lend more to faster-growing industries such as natural resources and the healthcare sector. However this may come at a cost to customers in the case of those industries that are struggling under a higher dollar, or face a subdued outlook.
Westpac's headline profit of $5.97 billion was down 15 per cent on the same period last year. However, the previous year's result had been inflated by a $1.11 billion tax credit as a result of a benefit from the St George Bank merger.
The latest result was driven by a stronger-than-expected second-half profit of $3.4 billion. Although analysts noted this was boosted by some $225 million in one-off items including higher treasury income and funds management fees.
Even with Mrs Kelly's promise, return on equity came in at 15.5 per cent falling from 16 per cent over the past year. While this measure is ahead of many of its rivals, it is still some way behind bigger rival Commonwealth Bank's 18.6 per cent.
Westpac's flagship retail and business banking arm powered the latest result with profit up 14 per cent over the year as profit margins improved. At the same time there were signs of a recovery in flat first-half performance for both Westpac's St George Bank and its BT Wealth arm.
"There is evidence that Westpac's strategy is working well," Deutsche Bank analyst James Freeman said.
Westpac declared a fully franked final dividend of 84? a share, in line with market expectations. This took the full-year dividend to $1.66 a share which is up 6 per cent on the last year.
The latest result rounds off the big bank reporting season, with profit growth among the big four running at the slowest rate for some time.
Combined full-year cash profits for the four major banks of $25.2 billion, was up 4 per cent from the previous year.
CBA was the standout with a bumper $7.1 billion profit while rival National Australia Bank's $5.4 billion profit was weighed down by its troubled UK business.
Mrs Kelly said it was a "lineball call" on whether the Reserve Bank cuts official cash rates today. But any cut which could see cash rates return to a low of 3 per cent was likely to happen within the next few months, she said.
Even after axing thousands of jobs across the bank over the past few years, Mrs Kelly said further job losses were likely as Westpac seeks to improve efficiency.
Westpac axed the equivalent of 2037 full-time roles over the past 12 months.
"I expect overall the numbers of staff to reduce next year, but probably not at quite the rate we had over the last few years," she said.