Westpac New Zealand (Westpac NZ)[i] says a strong half-year financial result has been driven by better than expected economic conditions.
Chief Executive David McLean said while the global COVID-19 pandemic was far from over, the financial effect on New Zealand had not been as significant as earlier feared.
“A year ago the outlook was very uncertain, with health, social and economic outcomes hanging in the balance.
“Thankfully, New Zealand has so far avoided the worst effects of the global pandemic, largely thanks to decisive leadership from the Government, and we are now cautiously optimistic.
“Westpac NZ’s balance sheet is sound and we’re well-positioned to support the economic recovery and the needs of households and businesses.”
Westpac NZ’s financial results released today for the six months ended 31 March 2021 showed a 98% increase in cash earnings[ii], compared with the same period last year, driven by a significant change in expected loan impairments.
“In the past year we made impairment provisions that allowed for a severe financial impact of COVID-19. That was a prudent approach given the outlook at the time,” said Mr McLean.
“We still expect a softening of economic conditions during the remainder of 2021, but based on our current economic outlook, we are writing back $99m of the credit provisions which were taken last year, as they are no longer forecast to be needed.”
Westpac NZ’s net interest margin remained stable at 2.06% compared to the prior comparable period, while lending increased 4%.
“We’ve offered low interest rates to customers and have taken a consistent approach to our LVR settings,” said Mr McLean.
“In January we released our lowest ever home loan rate of 2.29%pa. The special one-year fixed rate represented a drop of 20 basis points and other banks followed us.
“It’s pleasing that we’ve been able to help first home buyers to purchase 3,512 homes during the reporting period – a lift of 35% on the prior comparable period.”
Mr McLean said Westpac NZ was continuing to help customers coming off COVID-19 repayment assistance, and other households and customers that had experienced difficulties from COVID-19.
“We’re working closely with our business customers to check they’re faring okay through these uncertain times.
“Lending to large corporate and institutional organisations has eased off with some customers diversifying funding sources by issuing bonds, while others no longer need the same level of bank facilities that were made available in the early stages of the pandemic.
“We remain active in the agri sector, where we grew our market share.”
Mr McLean said the operation of the branch network had changed significantly in the past year.