Solid second half lays platform for Westpac NZ

1 November 2007

Solid second half lays platform for Westpac New Zealand

Westpac New Zealand today announced a net profit after tax of $465 million for the year ended 30 September, up 2 per cent. Core earnings (pre tax and impairment charges), however, was up a solid 9%.

Second half net profit after tax was strong, up 10% on the prior period.

Delivering his first annual result since taking the helm in March, Westpac New Zealand Chief Executive Brad Cooper said the stronger second half demonstrated that plans implemented over the past six months were gaining traction.

“The underlying performance of the bank in key areas was strong and we have started the new financial year with encouraging momentum,” Mr Cooper said.

“We’ve established good operating rhythm and it is beginning to show through.

“On the customer front, we added 20,000 new consumer customers in the second half, completing five quarters of sustained growth in customers,” Mr Cooper said.

Highlights of the result included above market growth in both lending volumes, up 17% year-on-year to $42.7b, and deposit volumes, up 15% to $25bn.

Mortgage volumes were up 19%, as the strong focus on the Auckland area and increased customer retention bore fruit.

Mr Cooper cautioned, however, that the mortgage market had slowed in the last quarter and was likely to remain tight through the next 12 months reflecting the level of interest rates.

Unsecured personal lending was up 12% and business lending up 13%.

Revenues were up 6% and expenses up 4%, resulting in a 120 basis point improvement in the key expense to income ratio to 47.1%.

Mr Cooper said credit quality remained strong and the business was unaffected by the recent global credit market issues set off by the sub-prime lending problems in the United States.

“Our increase in provisioning was driven by a combination of growth, regrading of some business banking credits to reflect changing economic conditions, and provisions relating to some individual exposures.

“Delinquency rates have moved back to historic norms after a period of lower than normal delinquencies.”Mr Cooper said.

Mr Cooper said that with the new management team and structure now in place the focus is on our customers, staff and products.

“Our aim is to earn all of our customers’business, and we’re investing in our people, service platforms and our products to achieve that,” Mr Cooper said.

In a very competitive market, Westpac has led the way with its Green Home Loan, Visa DebitPlus Card, and Online Banking Guarantee. Westpac’s KiwiSaver product is attracting one in every five of those choosing to sign up from among 45 KiwiSaver providers

“We’ve got a great branch network, motivated and committed employees, and strong links in to the community.

“Progress over the past half has been pleasing and we’ve established a solid platform and good momentum from which to deliver on our plans for ongoing growth,” Mr Cooper concluded

ENDS

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