Possible Job Cuts at Westpac

Westpac (ASX:WBC) is preparing for job cuts in an effort to cut costs as bad debts and cautious retail customers plague the big bank.

After posting a 2 percent drop in third quarter cash earnings yesterday, shares fell more than 4 percent to $20.25 compared to only 1-2 percent for the other big banks. Westpac's profit margin did rise to 2.12 percent in the three months to July, but it is still behind Commonwealth Bank's 2.19 percent and National Australia Bank's 2.32 percent.

"Customers are increasingly cautious and larger businesses continuing to deleverage," said Westpac chief executive Gail Kelly. "This was reflected in slowing system credit growth in the quarter, and weaker markets."

Kelly warned that boosting productivity by outsourcing will likely cause staff cuts, but did not say how many are going to be lost.

''Net-net, I would say staff will come down somewhat over the year we are in, and will come down somewhat over next year, but there are quite a few moving pieces,'' said Kelly.

The country's second biggest bank outlined plans last October of cutting thousands of head office and administration jobs.

It had over 35,000 employees at the end of last year.