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  • Westpac is looking to raise 2.5 billion from shareholders amid releasing its profits are down 16 per cent
  • The banking giant’s cash earnings also took a 15 per cent hit, and shareholders’ dividend payments lost 14 cents
  • Company CEO Brian Hartzer said the financial impacts stemmed from a challenging, low-growth and low interest rate environment,
  • While the bank announces its capital raise it has entered a trading halt until Wednesday
  • Westpac’s last closing price is $27.88 per share

Westpac is looking to raise $2.5 billion from shareholders amid announcing its profits are down 16 per cent for the 2019 financial year.

On top of this, the banking giant released its cash earnings are down 15 per cent – equalling a $1.2 billion loss – and is now sitting at $6.8 billion.

In response to its capital raising efforts, Westpac has entered a trading halt until Wednesday, November 6.

“2019 has been a disappointing year. Financial results are down significantly in a challenging, low-growth, low interest rate environment,” Westpac’s CEO Brian Hartzer said.

Customer remediation charges were a major factor playing into the company’s loses. Last month, Westpac took another $341 million dollar hit to its earnings as it works on refunding customers.

Following the Banking Royal Commission, Westpac has shelled out over $1 billion in remediation costs to customers who were paying for services they weren’t receiving.

“Our result was impacted by customer remediation costs… excluding these notable items, cash earnings were down 4% on FY18,” Brian advised.

In consequence of the decreasing profits and earnings, Westpac has shed 14 cents off its dividend payment, bringing it to 80 cents per share fully franked.

The bank’s CEO detailed to shareholders its decision to cut dividends was tough. “However, we felt it was necessary to bring the dividend payout ratio to a more sustainable medium-term range given the capital raising and lower return on equity,” Brian said.

“Although 2020 will be challenging, we believe our service-led strategy, discipline growth and a solid portfolio of business will deliver for shareholders and customers,” he added.

Westpac will raise $2 billion through a fully underwritten institutional share placement. The additional $500 million will be raised through a non-underwritten share purchase plan.

Westpac’s last closing price is $27.88 per share.

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