5 Nov 2013

Westpac chalks up record annual profit

7:00 am on 5 November 2013

Westpac New Zealand has lifted its annual net profit by 9% to a record $770 million, after a dramatic drop in charges for bad debts.

The Australian-owned bank says revenue rose 1%, and costs were flat, while charges for bad debts fell by 39%. Overall lending rose by 4% and deposits grew by 11%.

This lift in deposits was $4.6 billion, boosted by a growth in consumer online savings and business transaction accounts.

Westpac New Zealand chief executive Peter Clare says the bank performed well despite intense competition in the first six months squeezing margins.

Mr Clare says despite the competitive environment he is confident the bank can lift profits through innovations particularly in online banking.

The Australia-based parent company, Westpac Group reported a 14% lift in statutory net profit to a record $A6.8 billion.

Westpac says improvement in both its business and consumer segments was offset by lower margins as competition increased and customers switched to lower fixed mortgages.

Margins were also affected by the gap narrowing between the interest the bank pays on customers' deposits and what it earns on loans.

That was due to strong competition in the first six months and lower returns from non-interest bearing deposits.

Mortgages rose 4%, or $1.6 billion. Mortgages with a loan-to-value ratio of less than 80% rose 6% while business lending rose $0.5 billion.