Westpac New Zealand's annual profit has pushed past $1 billion for the first time, helped by a one-off $126 million gain from the sale of life insurer Westpac Life.
Westpac NZ's September year net profit after tax rose $116 million, or 12%, to $1.047 billion from $931 million in the September 2021 year.
Net operating income increased 10% to $2.709 billion, with net interest income up 8% to $2.278 billion and non-interest income rising 25% to $431 million.
Operating expenses rose 2% to $1.158 billion.
Westpac NZ recorded an impairment benefit, or write-back, of $27 million, down from write-backs of $84 million the previous year. Westpac NZ says its net interest margin was unchanged year-on-year at 2%.
'Not seeing any warning signs'
Home lending grew 5%, business lending rose 4% and deposits increased 3%, the bank says. CEO Catherine McGrath says Westpac NZ grew home and business lending market share in the second-half if its financial year, taking "strong momentum" into the September 2023 financial year.
"While the rise in interest rates has coincided with a retreat in house prices, recent home buyers who have bought for the long term shouldn't be worried about the current value of their property," McGrath says in Westpac NZ's press release.
"Inflation remains a concern, however our economists think that the rate of increase has peaked, and the accumulated effect of higher interest rates will gradually bring it down over the next couple of years," adds McGrath.
McGrath told interest.co.nz Westpac NZ hasn't yet seen any particular signs of borrower stress emerging. The bank's mortgage serviceability test for new borrowers is adding 2.5% to its interest rates at the time a loan is taken out. So far McGrath says "very few" borrowers are at a rate above that.
"For most customers fixing [loans] in 2021 that test rate would've been higher in terms of what they're experiencing in rollover at the moment," says McGrath. "We are not seeing any warning signs in the [mortgage] book so far."
Parent Westpac Banking Corporation posted a 1% drop in annual cash earnings to A$5.276 billion. Its net interest margin fell 17 basis points to 1.87%, its common equity tier one capital ratio fell 130 basis points to 11.3%, and its annual dividends rose 6% to A$1.25 per share, equivalent to 83% of cash earnings. Return on equity fell 46 basis points to 9.8%.
Westpac NZ's press release is here.
The Westpac Group press release is here.
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