Westpac NZ sees credit growth in 2012, bigger market share

Westpac NZ sees credit growth in 2012, bigger market share, Frazis says

By Paul McBeth

Nov. 2 (BusinessDesk) – Westpac Banking’s New Zealand unit is picking Christchurch’s rebuild to underpin growth in credit next year and the lender aims to snatch market share from rivals, chief executive George Frazis says.

The bank plans to cash in on greater demand for credit as Christchurch’s reconstruction gets underway, a rebuilding effort that will help drive economic growth to a 3.6 percent annual pace, Frazis said. The bank is targeting the rural sector as it looks to increase its customer base, he said.

“The Christchurch rebuild will result in increased credit growth relative to this year” and Westpac will benefit from that, he said. The bank’s strategy of investing in a depressed market has already won the lender market share, and Frazis said he expects it “will really result with customers continuing to grow.”

The lender reported a 41 percent in annual cash earnings to $454 million in the 12 months ended Sept. 30, mainly off the back of fatter interest rate margins and a bigger share of the lending market.
Frazis said Westpac NZ boosted home lending credit growth by 2.4 percent in the year, beating the market’s annual growth of 1.2 percent, while the bank’s business lending book grew 2.5 percent, ahead of the 0.1 percent contraction in the total market.

Westpac New Zealand’s lifted total net lending 3 percent to $51.2 billion, while total deposits rose 8 percent to $33.3 billion in the year.

Westpac has about 20 percent market share in New Zealand’s deposits, more than 20 percent of the country’s residential lending, and about 15 percent of business lending. Agri-business lending grew faster than the rest of the bank’s business loans, with Westpac’s strategy to boost its presence showing dividends, Frazis said.

The bank intends to return to the covered bond market, having raised 1 billion euros from a sale earlier this year, though Frazis said it will only return to market on its own terms.

“Our funding is 600 days and we’ve got very strong liquidity and capital with pre-funded requirements,” he said.

New Zealand’s cash earnings contributed 5.5 percent to the group’s total cash earnings of A$6.3 billion.

The group’s net profit rose 10 percent to A$7 billion in the 12 month period, on just a 1 percent increase in net interest income to almost A$12 billion. The bulk of the improvement came from a 32 percent decline in impairment charges on loans to A$993 million.

The shares fell 1.6 percent to $28.10 on the NZX and 1.1 percent to A$21.70 on the ASX.

(BusinessDesk)

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