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.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.