Westpac NZ Delivers Solid Result in a Strong Economy
Westpac New Zealand Delivers Solid Result in a Strong Economy
Westpac New Zealand (Westpac NZ) has delivered a solid result in an environment where core earnings were flat and high levels of competition continued to compress margins.
Core earnings for the 12 months ended 30 September 2017 saw a 0.3% decrease on the same period last year, but the overall result was boosted by a $135 million improvement in impairments as the dairy sector continued to recover.
Westpac NZ Chief Executive David McLean said the result reflected a strong economy and was supported by good credit quality, with the bank continuing to focus on enhanced customer service, quality lending and targeted growth in key sectors.
Home loans grew 4% and Business lending was up 0.7% over the past year, supported by customer deposit growth of 1.6% in a competitive market.
“We are continuing to focus on helping our customers and the New Zealand economy grow and we are investing in our business to improve the banking experience.
“Customers are taking advantage of today’s low interest rates by making extra mortgage repayments, building savings buffers and entering the property market.
“Over the last 12 months, we have reduced or removed 11 of our banking fees in direct response to customer feedback, lowered customer complaints by 21% and introduced a range of innovative products and services to make life easier for customers.
“We are experiencing strong momentum across the digital side of our business with sales through digital channels up 22% across the year and more customers than ever becoming digitally active.
“A continuing focus is supporting customers to save, in line with our savings bank heritage. We’ve lifted term deposits by 3% year-on-year, and the Westpac KiwiSaver Scheme is continuing to grow allowing many New Zealanders to buy their first home, and save for a comfortable retirement,” Mr McLean said.
Funds in the Westpac KiwiSaver Scheme increased by 19% ($837m), from $4.4bn to $5.2bn as at 30 September. During the same period, the number of Westpac KiwiSaver Scheme accounts increased by more than 2% (8,468) and the average balance increased from $11,300 to $13,200, up 17%.
“We’ve also stepped up our programme of proactively contacting default fund customers to check they are in the best fund for their needs. We’re pleased to have achieved the highest percentage of default to active choice conversions of all banks in 2017 and will continue with this focus to help our customers make better investment decisions.
“We’ve continued to support our farming customers through investment in more front line rural bankers. This has seen an increase in our agri-business lending and deposits of 4% and 17% respectively against the prior year,” Mr McLean said.
(All comparisons are for the 12-month period to 30 Sept 2017 vs. 12-month period to 30 Sept 2016)
• Cash earnings of $970m, up 9.5%
• Net interest margin 2.02%, down 13 basis points
• Operating expenses of $963m, a 0.9% increase with continuing investment in customer service
• Net benefit from impairments of $76m, compared with impairment charges of $59m
• Net profit before tax of $1.36bn, up 10.7%
• Funds in Westpac KiwiSaver Scheme increased 19.2% to $5.2bn
Westpac NZ completed its second year of a three-year programme to transform its customer service to make banking easier, safer and more efficient.
Mr McLean said Westpac’s award winning CashNav banking app, was continuing to prove popular and showed the bank’s commitment to helping customers manage their money.
“It categorises transactions and allows them to see month on month where they are spending the most and how it is affecting their saving for bigger things. So far, more than 97,000 Westpac account holders have downloaded the app.
“We’ve also introduced Value Me, a programme which reviews our customers’ accounts to see if they’re still on the best account to suit their needs and current spending patterns,” Mr McLean said.
Westpac NZ continues to improve its everyday banking experience for customers, which has been recognised by Canstar awarding Westpac NZ four Bank of the Year awards in 2017, and by Global Finance, awarding Westpac NZ Bank of the Year in 2017 for a third consecutive year.
The Westpac NZ fund manager, BT Funds Management (NZ) Ltd, was named 2017 FundSource Awards’ Fund Manager of the Year - Winner. The Westpac KiwiSaver Scheme also retained its SuperRatings Platinum rating for a fourth consecutive year.
Supporting New Zealand
Westpac NZ continues to support New Zealand in a range of ways beyond our core business and home lending and is focused on helping solve some of New Zealand’s biggest long-term challenges. In 2017 Westpac NZ:
• Increased the level of sustainable business lending to the CleanTech and environmental services sector from $1.289 billion in FY16 to $1.3 billion at FY17;
• Reduced carbon emission by 21% and offset the remainder, to be carbon neutral;
• Converted more customers to online statements resulting in 600,000 less paper statements;
• Provided Managing Your Money workshops to nearly 5,000 New Zealanders;
• Increased the proportion of women in leadership positions to 52.4%;
• Recognised tax expense of $390 million (an effective tax rate of 28.7%). The total tax paid in New Zealand by Westpac over the 12-month period to 30 September 2017 was $470 million. Year-on-year, Westpac has contributed approximately 3% of the total New Zealand corporate tax take.
• As part of the Westpac Banking Group, was rated the most sustainable bank globally in the 2017 Dow Jones Sustainability Index for the fourth year running;
• Was awarded one of three 2017 State of Corporate Social Responsibility Awards by the Australian Centre for Corporate Social Responsibility.