Westpac Banking Corp’s New Zealand unit lifted its full-year cash earnings, growing both deposits and lending against the backdrop of a strong economy and changing banking environment.
Cash earnings, the preferred measure of the Australian-owned banks, rose 5 percent to $1.0 billion in the 12 months to Sept 30, the Sydney-based lender said in a statement. Home loans and business lending both grew 4 percent over the past year, supported by customer deposit growth of 6 percent.
The result coincides with today’s release of a ‘culture and conduct’ report on the country’s major banks, conducted jointly by the Reserve Bank of New Zealand and the Financial Markets Authority following revelations of unethical and potentially criminal practices to the Australian royal commission of inquiry into banking misconduct.
The local Westpac unit reported that net interest margin widened 12 basis points to 2.15 percent. Operating expenses fell 3 percent to $936 million while its net interest income lifted 8 percent to $1.87 billion.
It reported impairment expenses of $3 million, compared with net impairment benefit of $76 million in the prior comparative period The low levels of impairment expenses reflected the net impact of stable asset quality and recoveries across the dairy portfolio, it said.
“Generally favourable conditions on the farm helped lift our agri lending by 5 percent, while deposits from farmers increased 14 percent. This reflects a good turn around in the dairy sector from three years ago and a broadly healthy agricultural sector,” said New Zealand chief executive, David McLean.
On the conduct and culture report, he said Westpac NZ had been “working closely with the regulators”.
“We are firmly focused on putting customers first and delivering positive customer outcomes. We will be working through any issues regulators identify to ensure we retain the trust of our customers and other stakeholders. “Where any issues are identified we are committed to fixing those quickly.”
The bank’s three-year business transformation project was delivering benefits to “simplify the banking experience, streamline dated processes, and improve services and fees for our customers,” he said.
McLean said 13 banking fees or charges had been reduced or removed in the past year, on top of 11 fees or charges in the previous year. Westpac NZ also removed individual sales targets for frontline branch and contact centre staff, with incentives strongly focused on customer service and feedback.