(6 November 2012 – New Zealand) Westpac New Zealand outshone its Australian bank owner, raking in NZ$707 million (A$563 million) in after-tax profit for the year to 30 September.The profit is a 22 percent surge from last year’s result and was largely driven by a reduction in bad debts, strong balance sheet growth and improved profit margins.
Westpac NZ’s operating income increased by 7 percent, with the mortgage book growing 3 percent and business loans by 4 percent despite the restrained lending environment.
The bank’s margin between the cost of funding and the loans it issues, rose from 2.64 percent to 2.72 percent, on the higher end of the scale compared to other banks.
Impairment charges fell by NZ$50 million as the quality of the loans on its books continued to improve.
Cross-selling multiple products to customers also contributed to the strong return, validating the bank’s recent investment in banker training and its branch network.
The number of Westpac customers with four or more financial products rose by 4 percent and those with wealth products increased by over 20 percent.
Westpac NZ chief executive Peter Clare said the growth in lending had been supported by a drive for deposits, which increased 11 percent to NZ$42 billion.
The major banks have all pushed to increase retail deposits to reduce their reliance on wholesale funding overseas, which is volatile and often more expensive.
Clare said global uncertainty ahead would continue to affect the decisions of New Zealanders.
‘Consumers have continued deleveraging as have many businesses who remain focused on strengthening their balance sheets rather than investing now for growth.’