Westpac reports 68% higher profit in NZ

Wednesday 4th May 2011

Westpac has increased its first-half cash earnings in New Zealand by 68% from a year ago, saying modest loan growth exceeded system growth.

The Australian-owned bank reported a NZ$210 million cash profit in the six months to March 31, 2011 for its New Zealand business, up from $125 million in the same period a year ago. This was after a $40 million impact from the earthquakes in Christchurch.

The New Zealand business had net interest income of A$486 million in the half year, down from A$492 million last year.

"The New Zealand economy has experienced a more subdued recovery than Australia and the Christchurch earthquakes have added a further degree of caution to an already soft economy," the bank said.

But the number of business loans under stress and the value of business loans in workout had declined.

The amount of 90-day deliquencies was higher in mortgages but had declined in consumer lending.

The bank said the quality of its mortgage portfolio remained high but mortgage delinquencies in New Zealand were higher than in Australia. Net mortgage write-offs improved by 1.2 basis points to 11 basis points.

The bank said a survey of its business customers in Christchurch showed that only 2% would be permanently affected by the earthquakes.

The bank's result included an explanation of ongoing changes to the bank's structure in New Zealand at the behest of the Reserve Bank of New Zealand.

The bank has already moved from being a branch to a dual registration operating model and implementation of further changes agreed in 2009 are still being worked through.

NZPA

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