Westpac announces profits rise

Monday, 6 May 2024

Westpac’s result was boosted by unwinding some loan loss provisions it put in place after Cyclone Gabrielle last year.

Westpac made an after-tax profit of $477 million in the six months to the end of March.

That was an improvement on the same period last year when the Australian bank’s New Zealand operation posted an after-tax profit of $428m.

Chief executive Catherine McGrath said the rise in half-year profit reflected the removal of provisions for losses on loans put in place after Cyclone Gabrielle hit the country in February last year.

McGrath acknowledged households were experiencing cost of living challenges as a result of higher home loan rates and inflation.

Westpac is the second bank to report its half-year profit to the end of March following Bank of New Zealand (BNZ) last week.

BNZ posted a half-year profit of $762m which was 5.3% down on the $805m in the six months to the end of March 2023.

Westpac chief executive Catherine McGrath says the bank has proactively contacted 51,000 customers who were facing refixing their home loans at higher loan rates.

The Westpac and BNZ profit announcements follow the Reserve Bank Te Pūtea Matua Financial Stability Report, which said bank profitability was declining.

While Westpac did beat its 2023 half-year profit, the 2024 half-year profit was lower than its half-year profit in 2022.

McGrath said Westpac had grown its mortgage lending by 3% in the six months to the end of March, and was well-positioned to grow when the economy recovered.

“We’ve supported first home buyers to purchase 3101 homes in the last six months, a 14% increase on the prior corresponding period, and we have a wide range of options in the market to help them on that journey,” she said.

However, many households are doing it tough as a result of high inflation and home loan rates, but McGrath said Westpac has been identifying those at risk, and proactively contacting them.

“We have been focused on early and proactive outreach, contacting more than 51,000 home loan customers who were due to re-fix at higher interest rates in the past six months, as well as more than 1800 customers we identified as at most risk of financial stress,” McGrath said.

“We know things are tough for businesses as well, especially in the retail and hospitality sector. Through our internal modelling we’ve identified those most in need of help and provided a range of support, such as help with cashflow,” she said.

Like BNZ, Westpac has said its expenses rose, partly as a result of spending more on its anti-scam defences.

McGrath said: “It has saved customers $41m in fraud and scam losses in the last six months, on top of $75m saved in the past full financial year,” she said.

“Over the past 18 months, we’ve prevented, recovered, or reimbursed $7 of every $8 of known fraud and scams that touched our systems,” McGrath said.

The bank has just over 1.5m customers in New Zealand. It has 112 branches and 407 ATMs, down from 114 branches and 427 ATMs at the end of March last year.

More to come