No $1billion profit target for Westpac, chief executive says
Westpac New Zealand chief executive David McLean said a 4 per cent profit rise for the first half of the bank's financial year was a "solid" result.
Westpac could end its financial year with a $1 billion after-tax profit, after announcing a "solid" half year profit.
But chief executive David McLean said the bank had not set itself a billion-dollar target.
"We are not focusing on that. We haven't got a big target painted on the walls with $1 billion," he said.
"Our focus is on keeping customers happy and delivering good value to them," he said.
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Westpac's profit before tax has risen 4 per cent to $671m for the first half of its financial year for the six months to the end of March.
In its last full financial year to the end of September 2017, Westpac posted an after-tax profit of $970m.
McLean used the bank's half year result announcement to reiterate the bank's commitment to proving it had been treating its customers fairly.
A royal commission on banking in Australia has revealed systemic failings of customers by big banks, leading to calls for New Zealand to hold its own inquiry into whether Australian banks' New Zealand subsidiaries have behaved similarly here.
McLean said Westpac NZ was "absolutely committed" to operating in a way that built confidence and trust with customers.
"Westpac welcomes the review announced last week by the Financial Markets Authority and Reserve Bank of New Zealand, and will co-operate fully in order to show the differences between the New Zealand and Australian banking environments," he said.
"We are confident in our systems and processes and are committed to continuous improvement to ensure we operate at best practice."
Signs of new life in the farming sector have led to a reduction in the number of troubled agriculture loans Westpac has on its books.
McLean said Westpac had developed "good momentum in a competitive market".
"This is a good result across a range of business areas, despite a slowing housing market, a competitive deposit environment, and impairments moving back to more normal levels. These results have been supported by strong fundamentals in the economy," McLean said.
McLean said focusing on reporting big numbers was a "problem" in New Zealand when it came to banking.
Banks had become more efficient, he said, and the creation of KiwiSaver, and its subsequent expansion, were both part of the reason why banks' profits had risen faster than the economy has been growing.
Westpac was not the only bank that could be setting impressive profit records this year.
ANZ could be on track for a $2b profit, after posting a half year statutory profit of $964 million.
McLean said Westpac had invested in supporting customers to save and invest, with customer deposit growth outpacing lending growth over the past 12 months.
"Our 'Value Me' programme, which proactively encourages customers to check if their transactional account, savings account or Westpac KiwiSaver scheme fund suits their needs, has been a particular success with customers," he said.
"More than 2000 customers have actively changed their Westpac KiwiSaver scheme fund to one that better suited their needs."
ANZ chief executive David Hisco said his bank was delivering sustainable growth.
Westpac had a mortgage lending book of $48 billion, at the end of March, 4 per cent higher than a year before.
Its home loans were more profitable too, with the net interest margin (the difference between the amount the bank borrows money and and the amount it lends it at) having risen.
Funds under management in the Westpac KiwiSaver Scheme increased by 19 per cent to $5.56b.
McLean said there had been a big increase in the amount first-home buyers had drawn out of the Westpac KiwiSaver scheme.
Westpac is the third of the big Australian-owned bans to report its half year result, with ANZ and BNZ both reporting profits increases of 11 per cent.
A slowdown in the property market has proved a boon for first-time buyers.
- Stuff
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