Declining investment markets and insurance claims above expectations have hurt earnings of BT Financial Group (BTFG), Westpac Bank's wealth management business.
Cash earnings dropped 12 per cent to $389 million for the year to September, from $442 in the prior comparative period, a BTFG statement to the Australian Securities Exchange said.
Falling stocks, property values and fixed income impacted BTFG's earnings through lower investment management fees due to a reduction in funds under management (FUM) and lower administration fees given reduced funds under advice (FUA).
FUM and FUA collectively slid 13 per cent to $73.9 billion, from $84.9 billion a year ago.
"Our general insurance business also experienced increased insurance claims through the impact of unexpected severe weather events throughout the year," the statement said.
But despite the higher claims, life and general insurance earnings advanced 6 per cent to $147 million, from $139 million last year. Life insurance in-force premiums climbed 8 per cent to $312 million as of September 2008.
BT Wrap's margins sweetened after wrap cash balances surged 33 per cent to top $1 billion in the 12 months to September 2008.
BTFG cut $9 million in operating expenses through a number of initiatives including reduced spending on new projects, the statement said.
"This was achieved while maintaining momentum in key strategic investments in superannuation and supporting the distribution network to deliver continued market share growth."
Overall, Westpac reported full-year profit increased 6 per cent to $3.72 billion, despite the lender's bad debts nearly doubling to $931 million.
St George Bank shareholders on November 13 will vote on a merger proposed by Westpac.
