Australian banking major Westpac reported a statutory net profit of A$1.19bn for the first half of the fiscal year 2020, a 62% drop on a year-on-year basis.

The bank has attributed the fall in net profits to several factors including higher impairment charges of A$2.23bn due to the anticipated economic impact of the Covid-19 pandemic.

It also includes bad loan provisions of A$5.8bn of which A$1.6bn is related to Covid-19 and a penalty of A$900m related to a money-laundering scandal in 2019.

For the six-month period ended 31 March 2012, Westpac’s revenues rose by 6% to A$10.6bn, while operating expenses increased by 21% to A$10.90bn compared to the year-ago period.

The bank has reported cash earnings of A$993m for the first half, a plunge of 70% from last year.

The said that the cash earnings were impacted by higher insurance claims related to bushfires, severe weather events, reduction of certain assets and higher impairment charges.

The cash earnings per share (EPS) plummeted 71% at A$0.28 per share from A$0.71 in the year-ago period.

The net interest margin and common equity Tier 1 (CET1) capital ratio stood stable at 2.13% and 10.8%, respectively.

In the light of current economic conditions, the bank has suspended interim dividends indefinitely. The bank said that no dividends will be paid in June this year.

Commenting on the results, Westpac Group CEO Peter King said: “Westpac’s balance sheet remains strong. Customer deposits were up A$19bn over the half, more than funding loan growth which increased by A$5bn. The deposit to loan ratio is now over 75%.

“We are well capitalised and our liquidity and funding metrics are comfortably above regulatory requirements.”