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Westpac NZ outperforms parent as FY earnings climb 41%

Wednesday 2nd November 2011

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Westpac Banking’s New Zealand unit continued to outperform its Australian parent, getting praise as a business highlight in the lender’s overall result with a 41 percent boost in cash earnings.

The local unit reported cash earnings of $454 million in the 12 months ended Sept. 30, up from $322 million a year earlier as it slashed its charge on impaired assets by almost a third to $236 million. Net interest income grew 8 percent to $1.3 billion. New Zealand’s cash earnings contributed 5.5 percent to the group’s total cash earnings of A$6.3 billion.

The group’s net profit rose 10 percent to A$7 billion in the 12 month period, on just a 1 percent increase in net interest income to almost A$12 billion. The bulk of the improvement came from a 32 percent decline in impairment charges on loans to A$993 million.

“The performance of Westpac Retail& Business Banking and New Zealand was particularly strong,” group chief executive Gail Kelly said in a statement.

Westpac New Zealand lifted total net lending 3 percent to $51.2 billion, while total deposits rose 8 percent to $33.3 billion in the year.

The New Zealand business, which is the country’s second-biggest lender by assets, improved its interest income on better interest rate margins. Impairment charges came down on fewer delinquencies as the local economy improves and new impaired assets reduce, the bank said.

The dual-listed shares were unchanged at $28.55 on the NZX, and have gained 0.7 percent this year.

Last week, Bank of New Zealand boosted annual cash earnings 17 percent to $612 million as it grabbed market share from its rivals in what chief executive Andrew Thorburn said was an environment with little credit growth.

(BusinessDesk)

BusinessDesk.co.nz

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