Westpac can fund the energy shift, says King
- Reading The Australian Financial Review
On November 2, under Article 6 of the Paris Agreement, finalizing carbon market trading rules is expected as one of the most critical outcomes for COP26 in Glasgow this week. Financing the global energy transition is also a focus, especially for institutional banks.
Westpac Institutional Bank is keen to lend into the transition to low carbon energy with the aspiration of $1.9 billion new lending to “climate change solutions”, aiming to $3.5 billion by 2023, and to $15 billion by 2030. The primary lending is to renewable energy companies at 79%, compared with 13.2% for gas and 5% for coal. In this latest half, the institutional bank lost $900 million in cash earnings, compared to a profit of $185 million in the last second half. The leading cause is the $965 million in notable items, including the write-down of goodwill following its retreat from Asia. In addition, with $59 million in additional risk, compliance and legal costs, and a $146 million loss relating to one individual borrower, the revenue of the institutional bank declined by 7% to $1.1 billion.
In contrast, ANZ captured the benefits from customers borrowing for digitization, M&A and restructuring supply chains, with its aspiration in targeted renewables lending of $50 billion by 2025. Moreover, ANZ takes advantage of the following global super cycle by maintaining the extensive institutional bank in 33 jurisdictions to support large corporates and projects.
