Westpac adds to bank earnings with $1b record haul
Monday, 5 November 2018
Westpac has crossed the $1 billion profit mark for the first time - and its chief executive says it would be a worry if banks weren't making big profits.
The bank has reported earnings for the year to September 30 of $1.017 billion, up 5 per cent on the same time the year before.
It follows ANZ's $2b profit, and a 10 per cent jump in profitability for BNZ.
The bank grew deposits and lending, against the backdrop of a strong economy and changing banking environment.
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It had low levels of impairment expenses.
Westpac NZ chief executive David McLean said the banks' financial success was a function of the strong economy.
It would be a concern if they were not doing well, he said.
'You have to recognise that profits vary tremendously in the economy cycle… at the moment bad debts are at an all-time low.'
Banks were big businesses, he said, and profits had to be put in that context - Westpac is required to hold $8b of capital to keep depositors safe. Returns on assets were running at 1.2 per cent and return on equity was about the 'middle of the pack' in corporate New Zealand.
'The thing banks suffer from is that it's a big number and people focus on that.'
A three-year focus on business transformation was delivering benefits for the bank, its customers and communities.
'This project involved investing money into critical parts of the business to simplify the banking experience, streamline dated processes, and improve services and fees for our customers.
'Our mission is to help our customers financially, to grow a better New Zealand. We are supporting our customers to save and invest, with deposit growth again outpacing lending growth over the last 12 months and customers using low interest rates to repay their mortgages faster.
'We have invested significantly over the past three years to enhance services and outcomes for customers and will continue to do so.'
McLean said 13 banking fees or charges had been reduced or removed in the past year, on top of 11 fees or charges in the previous year. Westpac NZ also removed individual sales targets for frontline branch and contact centre staff, with incentives strongly focused on customer service and feedback.
McLean noted the report on conduct and culture by the Financial Markets Authority and Reserve Bank of New Zealand.
'We've been working closely with the regulators. We are firmly focused on putting customers first and delivering positive customer outcomes. We will be working through any issues regulators identify to ensure we retain the trust of our customers and other stakeholders.
'Where any issues are identified we are committed to fixing those quickly.'
He said banks had not yet been given individual reports. McLean said he was pleased that there were no widespread systemic issues identified.