Westpac New Zealand's annual profit jumped 16% as income rose and loan impairment charges fell.
The bank's September-year net profit after tax rose $167 million, or 16%, to $1.226 billion from $1.059 billion last year, according to its latest general disclosure statement.
Net operating income rose $194 million, or 7%, to $3.095 billion, with net interest income up $186 million, or 7%, to $2.839 billion.
Operating expenses rose $74 million, or 6%, to $1.365 billion. Loan impairment charges tumbled to $27 million from $135 million.
Westpac NZ CEO Catherine McGrath said the bank grew home lending by 3% to $68 billion over the September year, business lending rose 2% to $33.4 billion, with deposits flat at $79.7 billion.
"We estimate by the end of the year that more than a quarter of our fixed home loan customers will have rolled onto lower rates, and nearly three-quarters by this time next year," McGrath says.
"Westpac has acted swiftly to pass falling interest rates on to customers. The bank has cut its advertised 1-year fixed home loan rate by a total of 1.15% p.a. since the start of July, and cut floating rates by a combined 0.75% p.a. in line with Official Cash Rate reductions, with potential interest savings of $58 million for its 60,000 floating home loan customers over the next 12 months."
"Our business and agri customers have also seen rates fall over the same period, which will help farmers and growers save an average of around $13,000 a year each in interest costs," McGrath says.
Peter King, CEO of Australian parent Westpac Group, says NZ mortgage customers are on average 11 months ahead on payments.
McGrath told interest.co.nz over the past two years Westpac NZ had focused on proactively contacting customers facing interest rate increases. Now, with unemployment rising, the focus is on; "making sure that we're supporting customers who may be having a reduced income into the household."
In a falling interest rate environment she says some customers are deciding to "sit on a floating rate for a while simply to see what happens. Or they're doing a really sensible thing of hedging their bets where they're leaving some of it on the floating [rate] and they're putting some of it on a fixed rate."
Net interest margin rises
Westpac NZ says its annual net interest margin, the difference between what the bank borrows money at through the likes of deposits and what it lends it out at, rose four basis points to 2.17%. Its annual cost to income ratio rose 138 basis points to 47.72%.
Westpac NZ paid annual dividends of $657 million, up $5 million year-on-year.
As of September 30, Westpac NZ had total capital of $11.335 billion versus its minimum requirement of $6.317 billion.
Figures released in Westpac Group's results show Westpac NZ's mortgages 90+ days past due rose to 0.49% of its total portfolio from 0.33% at September 30 last year.
McGrath says; "we have strong momentum and are heading into 2025 energised about helping Kiwi households, businesses and the economy to grow."
Meanwhile, Westpac Group posted a 3% drop in annual profit to A$6.990 billion. It's annual net interest margin dropped two basis points to 1.93%, and its return on equity fell to 9.77% from 10.09%. It's paying out 73% of profit in dividends. Westpac Group's common equity tier one capital ratio stood at 12.49% at September 30, up from 12.38% a year earlier. Its total stressed loan exposure as a percentage of total committed exposure rose to 1.45% from 1.26% year-on-year.
Westpac NZ's press release is here.
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