Westpac NZ boosts annual earnings 22 percent on bigger market share

Monday 5th November 2012

Westpac Banking Corp's New Zealand unit lifted annual earnings 22 percent as it grabbed more market share and squeezed more from its interest margins, marking it as the fastest-growing unit of the Australian lender.

Cash earnings rose to $707 million in the 12 months ended Sept. 30, from $578 million a year earlier, the Sydney-based lender said in a statement. That accounted for about 9 percent of the group's A$5.97 billion net profit.

The New Zealand unit increased net operating income 7 percent to $2.01 billion, and cut its impairment charge for bad loans 21 percent to $191 million. The bank's net interest margin widened 8 basis points to 2.72 percent.

"Despite subdued economic conditions, the business achieved sound balance sheet growth, improved margins, strong wealth and insurance cross-sell and well-managed expenses," the lender said.

Westpac New Zealand increased term deposits 11 percent to $23.1 billion as at Sept. 30, and grew net loans 3 percent to $59.4 billion. Of that, mortgages grew 3 percent to $35.4 billion and business loans rose 4 percent to $21.8 billion.

New Zealand chief executive Peter Clare said agriculture was a strong performer for the bank, which grabbed nearly half a percentage point of market share.

"We remain committed to supporting agriculture in New Zealand our ongoing investment into the sector will see 20 new frontline agri-bankers employed in the next 12 months," he said.

Clare was more upbeat about the prospects for New Zealand's economy, saying it is well-placed for growth compared to international peers.

"The key now is moving from caution to confidence and investing for future growth," he said.

The Australian group lifted cash earnings 5 percent to A$6.6 billion with a 6 percent gain in revenue to A$17.98 billion. The board declared a fully-franked final dividend of 84 Australian cents, with a Nov. 15 record date. That takes the annual payout to A$1.66 per share.

Westpac's dual-listed shares were unchanged at $31.55 on the NZX, ahead of Australia's open.

BusinessDesk.co.nz

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