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(Reuters) – Westpac Banking Corp on Wednesday reported a higher first-quarter profit compared with the average of the previous two, and saw a decline in stressed assets as the Australian economy and the housing market recover from the COVID-19 pandemic.

© Reuters/DAVID GRAY FILE PHOTO: A pedestrian looks at his phone as he walks past a logo for Australia’s Westpac Banking Corp located outside a branch in central Sydney

Australia’s success in containing the pandemic, supported by unprecedented amounts of monetary and fiscal support, has helped the country’s banks overcome near-zero interest rates and bad debt provisions.

Cash profit for the three months to Dec. 31 stood at A$1.97 billion ($1.53 billion), boosted by a A$501 million impairment benefit and ahead of the quarterly average of A$808 million of second half of fiscal 2020.

Australia’s third-largest bank said its total stressed asset exposure fell 15 basis points to 1.76% in the quarter, while assets on its watchlist fell to 0.8%.

“The economy is recovering, consumer and business confidence is strong, and the labour market has been much more resilient than expected,” said Chief Executive Officer Peter King.

The resurgent housing market is helping big banks through the crisis as prices hit record highs and home loans surge, although Westpac is facing up with top lender Commonwealth Bank of Australia, which is edging further gains in market share.

The Sydney-based bank’s common equity tier 1 ratio increased to 11.9% by the end of December, up from 11.13% three months earlier.

($1 = 1.2887 Australian dollars)

(Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Maju Samuel and Shailesh Kuber)