Westpac NZ cites 'intense competition' for home loans as annual profit and net interest margin fall

Westpac New Zealand's annual profit dropped 14% as the bank's income and net interest margin fell, and expenses and loan impairment charges rose.

Westpac NZ's net interest income, the difference between revenues earned on lending and paid on borrowing from the likes of deposits and bonds, fell $130 million to $2.744 billion. The bank's net interest margin was also dragged down nine basis points year-on-year to 2.23%, "reflecting intense competition, particularly for new home lending, and the declining interest rate cycle in 2025," Westpac NZ says.

The bank's 4% annual home loan growth, to $74.5 billion, was below the overall market growth of 5.4%, based on Reserve Bank statistics.

Westpac NZ's September year net profit after tax, as reported in its general disclosure statement, dropped $167 million, or 14%, to $1.036 billion from $1.203 billion in the 2025 September year.

Net operating income fell $128 million to $2.991 billion, as operating expenses rose $27 million to $1.520 billion with ongoing technology investment. Meanwhile, annual loan impairment charges were $33 million swinging from benefits, or write-backs, of $44 million the previous year.

Westpac NZ says it grew net lending 5% to $111.5 billion, and deposits 4% to $84.4 billion, growing above the overall market growth rate in in medium and large business lending and household deposits. Business lending rose 6% to $36.3 billion.

CEO Catherine McGrath says the the bank's median home loan customer is nearly 11 months ahead on fixed repayments.

"It feels like economists have been saying this for a while now but we think there are better times ahead. Obviously, external volatility could still have a material impact on that outlook," McGrath says.

"The housing market remains subdued, and may only grow modestly over the next year, but the upside is first home buyers are getting more of a look-in. We helped nearly 7,000 Kiwi families get on the housing ladder this year, up 9% on last year," she says.

The latest Reserve Bank data shows more than half the loans made to first home buyers are low equity loans, as banks increase high loan-to-value ratio lending.

McGrath says stress among business customers' lending is below where it was a year ago, helped by the strong Fonterra payout for dairy farmers.

"Household customer stress is flat and below the historical average. However, higher unemployment has driven a small increase in hardship applications."

Westpac NZ's loan provisions were $9 million higher year-on-year at $500 million, with individually impaired assets up $23 million to $235 million. Loans at least 90 days past due fell $13 million to $305 million.

Westpac NZ's press release is here. 
Australian parent the Westpac Banking Corporation also released annual results on Monday. Its announcement is here, its investor presentation is here, and its press release here.