Westpac New Zealand has posted a 7% rise in half-year profit to a fresh record high largely thanks to a big drop in impairment charges on bad loans.
Westpac NZ's cash earnings for the six months to March 31 rose NZ$24 million, or 7%, to NZ$370 million. The increase came as impairment charges fell NZ$31 million, or 32%, to NZ$67 million.
Westpac NZ restated its cash earnings for the first-half of last year at NZ$346 million, up from the NZ$333 million reported a year ago, which was the previous record high. This was due to the inclusion of Westpac NZ's treasury operations in its results, which saw the transfer of NZ$7 billion of liquid assets from its Australian parent Westpac Banking Corporation.
In the March half this year, Westpac NZ's net interest income rose 1% to NZ$790 million, total net operating income increased 2% to NZ$1.013 billion, and operating expenses were up 3% to NZ$431 million.
During the six months to the end of March Westpac NZ grew total deposits by 7% to NZ$45 billion and net loans by just 1% to NZ$59.9 billion.
Westpac NZ's expense to income ratio rose to 42.5% from 41.7% in the half-year to September 30 last year. Return on assets rose 3 basis points, year-on-year, to 1.20%.
The bank's net interest margin was down 35 basis points, versus the second-half of its last financial year, to 2.38%. However, the bank says the margin was hit by the transfer of the liquid assets, without which its margin would've fallen 7 basis points, with this smaller drop due to strong deposit competition, and flat lending spreads. The transfer also helped push total assets up 12% to NZ$68.4 billion.
Meanwhile, Westpac NZ said its total stressed assets to its total committed loan exposure fell to 2.96% from 3.24% in the half-year to September 30, 2012.
Westpac Banking Corporation, meanwhile, posted a 10% rise in half-year cash earnings to A$3.525 billion, ahead of the consensus of analysts' expectations for A$3.41 billion. It also lifted its fully franked interim dividend by 4 cents to A86c per share, and declared a fully franked special dividend of A10c a share. The group's return on equity rose 102 basis points to 16.1%.
Here's the Westpac group's full results announcement, and see my story previewing big bank reporting season here.
7 Comments
You raise an interesting point given that OBR is just around the corner.
It seems amazing to me that the preferred RBNZ solution is to extinguish the world's premier High Quality Collateral - cash.
I recommend all students of money read this very comprehensive article about the future of banking and the shortage of High Quality Collateral (HQC).
Tough read - But what I do get out of it is this
Deleveraging is still on the horizon, and
The elites sitting on the top of the totem have still not realised they rely on the hoards of lemmings down the bottom to create and provide High Quality Collateral
While Ben Bernanke and his cooperatives keep propping up the elites, the elites won't deleverage, and their captive assets will continue to hide, running the risk of witthering away. They need to be constantly re-cycled. Refreshed. Re-engineered. Which ain't happening
If you are like me and believe that the resources to support growth are increasing in cost greater than the GDP produced then all that is left is cannibilisation of existing wealth. Recommendation to everyone is to get yours out of the way before you are Cyprused.
Only thing I struggle to get with the shadow banking system is how they expand the money supply. Deposits and loans are matched if I am correct, but is the expansion due to the resultant production providing capital (HQC) for the conventional banks to leverage? If that is the case how did shadow banking get larger than conventional?
its OK, she is using the word as a Noun:
Big banks were still doing it ''tough'', Westpac chief executive Gail Kelly said after Westpac reported a record half-year profit of more than $3 billion and a bumper dividend for shareholders
Read more: http://www.smh.com.au/national/banks-rake-in-profit-but-no-rate-cuts-20130503-2iykl.html#ixzz2SH6EBUiz tough /təf/ Adjective (of a substance or object) Strong enough to withstand adverse conditions or rough or careless handling: "tough backpacks for climbers". Noun A tough person, esp. a gangster or criminal. Synonyms adjective. hard - stiff - strong - solid - firm - severe - rugged noun. ruffian - hoodlum - rough - hooligan
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