Westpac profit up 13% to $1.2 billion, fewer households struggle to repay home loans

Monday, 3 November 2025

The economy is struggling, but Westpac has managed to increase its after-tax profit by 13%.

Westpac New Zealand’s after-tax profit rose by 13% to $1.2 billion for its year to the end of September as a result of lending growth and higher margins.

Last year the bank recorded a profit of $1.05b.

The bank also had to provision less for losses on loans as the amount of seriously overdue mortgage loans fell as lower interest rates resulted in borrower’s mortgage repayment bills falling.

The bank did face higher costs, including from rising staff costs, but they did not rise as fast as the bank’s income.

Deposits grew by 2% and the bank’s loan book grew by 4%, with most of the growth coming not from business loans but from loans to people to buy houses.

The improved profit helped swell the total “realised” pay received in the financial year by Westpac NZ’s chief executive Catherine McGrath from A$1.79 million last year (NZ$2.05m) to A$3.5m (NZ$4m) this year.

McGrath said: “Our focus on growth in key customer segments has helped drive our result.

Westpac's Economic Overview suggests a brighter future for New Zealand, projecting over 2% growth in 2025. With mortgage rates falling, an 8% rise in house prices is anticipated as investors return to the property market.

“We’ve increased our lending to small and medium businesses nearly five times faster than the market, highlighted by $770m of new business lending in the September quarter, one of our strongest ever quarters of growth.”

Westpac NZ is part of the Australian Westpac banking group, contributing 16% of the group’s profit after tax.

But the bank said New Zealand’s economic recovery had been slower than anticipated, and export activity had been dampened by global trade uncertainty and what it called “broad-based industry weakness”, and household spending remained constrained by elevated living costs.

Anthony Miller, Westpac’s Australian group chief executive, announced an overall 1% drop in profit after tax across the entire Australian and New Zealand banking group.

He called it a “solid” result, and noted that bad debts owed by borrowers were lower than 12 months before.

Higher operating expenses, and slightly lower margins, contributed to the fall in profit.

McGrath said lower interest rates had flowed through to household finances, and many borrowers were starting to rebuild loan buffers and “confidence”.

“In the last week of October, our customers were rolling off an average fixed home loan rate 5.95% per annum,” McGrath said.

“A customer with a $300,000 loan on a 15-year term rolling off that rate onto our current one-year special of 4.49% per annum would have an extra $230 a month in their back pocket,” she said.

“On the business side, we’ve passed through more than the 3% per annum of OCR (official cash rate) cuts on some variable lending rates since last July,” she said.

“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,” McGrath said.

“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,” she said.

It wasn’t only households trying to reduce their debts to Westpac.

Farmers and growers had been using high commodity prices to pay down debt and their interest burdens paid to the bank were now $48,600 a year lower than they were a year before.