Westpac New Zealand became the last of the branches of
Australia's big four banks to report its full-year profit
yesterday, coming out on top in the percentage increase for
The Otago Daily Times usually focuses on operating
earnings because they give a fairer indication of how
profitable a company is before any other accounting measures
are applied to a balance sheet.
However, the four banks - Westpac, ANZ, ASB and BNZ - this
year made much of their cash earnings, or "bottom-line
Westpac NZ's cash earnings for the year ended September came
in at $707 million, up 22% from the $578 million reported in
the previous corresponding period (pcp).
The BNZ's cash earnings were reported at $741 million, up
21.5% from the $612 million in the pcp.
ASB's cash earnings in the year ended June were up 21% to
$685 million from $568 million in the pcp.
ANZ NZ, the country's largest bank, reported cash earnings of
$1.27 billion, up 17% on the $1.1 billion in the pcp.
All the banks were helped in reporting improved cash earnings
by allowing less for impairment, or bad loan, charges.
The operating earnings reported by the banks ranged from an
about 13% increase for ASB, 10% for Westpac, 8.8% for BNZ and
a modest 5% for ANZ.
The banks have received extra attention and criticism this
year as their profits have increased, but without the critics
looking too closely at the reasons for the profit increases.
The Australian banks, and their New Zealand branches, are
among the strongest in the world and were not caught up to
any major extent in the United States banking crisis which
was started with the packaged mortgages lent to people with
no chance of paying them back.
The banks allowed inflated amounts for bad loans but managed
those loans carefully.
Now, the need for allowing for those loans has diminished and
so has the need for carrying those high amounts on the
All the banks have been careful to point out their "community
good" projects and Westpac NZ chief executive Peter Clare was
He said Westpac continued to provide practical help and
leadership in Christchurch, including "most notably" breaking
the insurance impasse that had delayed many Cantabrians from
rebuilding their homes.
It also committed to returning to the CBD as part of the
city's redevelopment plan. During the year, more than 100,000
people used the Westpac business and community hub that
continued to provide free services and facilities for
Staff in New Zealand had completed 14,685 volunteer hours and
Westpac had started a new national blood drive for its staff
as "Partner for Life" with NZ Blood Service, Mr Clare said.
Westpac NZ continued to perform well and was well positioned
to support growth as the economy lifted.
"We are a strong and sustainable bank, well managed with
balanced growth, with a focus on the quality of our lending.
And we continue to invest in ways to make things easier and
simpler for our customers," he said.
The bank's strong deposit growth of 11% had fully funded its
loan growth of 3% and improved the deposit to loan ratio from
66% to 71%.
"This growth has been achieved through an increased deposit
focus and ongoing innovation."
Home loans increased 3% in a very competitive market and
business lending increased 4%.
Agriculture was a strong performer for the bank, Mr Clare
said. The bank intended employing 20 new frontline
agricultural bankers within the next 12 months.
Global uncertainty continued to affect the decisions of New
Zealanders, he said.
Consumers had continued to pay down debt, as had many
businesses which remained focused on strengthening balance
sheets rather than investing now for growth.
"The New Zealand economy is well placed for growth compared
to many others around the world. The key now is moving from
caution to confidence and investing for future growth," Mr