Westpac New Zealand's annual profit fell 2% as operating expenses surged $128 million.
Westpac NZ's September-year net profit after tax, as reported in its general disclosure statement, fell $23 million, or 2%, to $1.203 billion from $1.226 billion in 2024.
The bank's annual net interest income rose $35 million to $2.874 billion, but its non-interest income fell $11 million to $245 million. Westpac NZ booked impairment benefits of $44 million versus charges of $27 million in the September 2024 year.
Expenses jumped $128 million, or 9%, to $1.493 billion with staff costs, technology and telecoms and software amortisation all higher.
Westpac NZ says it grew home lending by 5% over the year to $71.3 billion, business lending by 2% to $34.2 billion, and deposits by 2% to $81 billion despite a drop in term deposits.
McGrath says customers are starting to rebuild both loan buffers and confidence.
"Our data shows a higher proportion of home loan customers are at least three months ahead on their home loan repayments than six months ago, following nearly three years of decline," CEO Catherine McGrath says.
"The average customer is nearly 11 months ahead on repayments, with an average 'buffer' of almost $12,000. Housing arrears and the number of customers being supported by Westpac's financial hardship team are also down on the 2024 financial year."
"We think all this will add up to increasing consumer and business confidence and therefore higher spending to stimulate economic activity as we head into 2026," McGrath says.
McGrath says the bank invested heavily including in improving digital services and expanding "points of presence" around NZ through community banking initiatives, this includes launching community banking vans, trialling community banker sites, and extending branch opening hours, plus introducing a range of new anti-fraud tools.
Westpac NZ reported a 15 basis points increase, year-on-year, in its net interest margin to 2.32%. The net interest margin is the difference between what the bank borrows money at through the likes of deposits and what it lends it out at. Australian parent Westpac Banking Corporation posted a three basis points increase in net interest margin, excluding notable items, to 1.95%.
The bank's cost-to-income ratio fell 10 basis points to 47.62%.
Westpac NZ's annual dividends paid on ordinary shares rose $16 million year-on-year to $673 million.
McGrath says Westpac NZ is well positioned to support customers "through what we think will be an economic upturn over the coming year."
The bank's provision for expected credit loss dropped $54 million year-on-year to $444 million, and its total capital increased $529 million to $11.864 billion.
Westpac NZ's press release is here.
See details of Westpac Banking Corporation's annual results via the links below.
The Westpac group presentation is here, the Westpac group announcement is here, and the Westpac group press release is here.
8 Comments
This is why I think the economy should grow next year, and maybe by quite a lot. The average household isn't constrained by the cost of living*, in fact they have been making excess mortgage payments. Once sentiment starts to improve, people will be less worried about their mortgage, and they will start spending instead of increasing their repayments.
* Of course this doesn't apply to everyone.
Agreed, I can also see an improvement in the overall economy in 2026.
I'm still not convinced about a recovery.
I know lots (and more than ever) quality people, graduates and Uni holiday job seekers who can't get work at the moment
Agreed, I can also see an improvement in the overall economy in 2026.
The imagery is amusing Dr Y. Sitting under a Kauri tree like an Indian guru, eyes rolling back in your head, chicken feathers and bones strewn everywhere.
Or is this just a visit to the clairvoyant or the collective reckons around the water cooker?
The average household isn't constrained by the cost of living*, in fact they have been making excess mortgage payments
Well if Westpac says so, it must be true, right?
When was the last time you heard any bank talking about h'holds living paycheck to paycheck and living within their means? They don't. It's not in their interests.
Much better information of the state of behavior is likely to be found in the data sets of the supermarkets and credit card companies.
Doesn’t really give an indication of the number of people scraping by. Our buffer (with Westpac) is in the hundreds of thousands, and there are bound to be other households, like ours, skewing the average upwards.
The people scraping by are already reflected in the current GDP numbers. But having a good sized average buffer implies there is some room for increased spending once confidence improves.
Whether people will start spending or whether they will continue to nail their mortgage remains to be seen. Our household has chosen to keep increasing mortgage repayments, so we won’t be helping next year. In 3 years it should be gone though, then we definitely will be.
NIM at 232 points. And in NZ bank risk is predominated in residential which is the narrowest margin ( lowest risk). I’m pretty sure UK banks were closer to 100. Not sure about US banks as they tend to run bigger risk books so could be a little wider than the UK.
We are getting cleaned out here.
why doesn’t the CC look at relative NIMs around the world vs. banks ratings (funding costs) and risk profiles ?
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