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Westpac New Zealand earnings up three per cent to $1 billion

Westpac New Zealand has announced a three per cent profit rise in part supported by the sale of its stake in Paymark.

Source: Fair Go

Its net profit after tax for the September year rose to $1.042 billion.

Westpac NZ chief executive David McLean says home loans and business lending grew five per cent with customer deposits up four per cent.

He said low interest rates were providing opportunities for first home buyers and others looking to make a move in the property market.

“We’ve never seen interest rates this low in New Zealand. It helps with housing affordability and business investment, and presents a great opportunity for existing borrowers to pay down debt.”

Two-thirds of Westpac NZ customers were ahead in their mortgage repayments by a median average of eight months, or an average of $8,652, at 30 September 2019.

However, low rates had also meant savers, many of whom rely on deposit interest to supplement their retirement income, saw their returns reduced.

Business conditions had deteriorated in the second half of the reporting period based largely on uncertainty about the outlook into next year, Mr McLean said.

“Although significant risks exist globally, the local economy remains in reasonable health, our business is fundamentally sound and our balance sheet continues to be well managed.”

Meanwhile, its parent company, Westpac Banking Corporation has cut its dividend for the first time in a decade after its full-year profit fell by 15 per cent to AU$6.85 billion.

The nation's second largest lender has also announced a AU$2.5 billion capital raising as it seeks to shore up its balance sheet to cope with stricter regulatory capital requirements.

Westpac has cut its final dividend from a 94 cents to 80 cents but maintained a 100 per cent franking rate, with statutory net profit slipping 16 per cent to AU$6.78 billion.