Westpac’s net profit dips

AUCKLAND: Westpac New Zealand made a cash profit of $635 million for the six months to March 31 — up 9% on its 2021 first half, largely driven from the gain on the sale of its life insurance business.

Excluding notable items its cash earnings were down 15% to $504 million due to lower impairment benefits and higher spending on risk and compliance projects.

The net profit of the WNZL Banking Group was down 5% to $497 million.

Westpac New Zealand chief executive Catherine McGrath said despite a changing economic outlook, its customers remained resilient, which was reflected in the solid result.

‘‘Six months ago the housing market was still reaching its peak, the Omicron variant hadn’t emerged and there was peace in Europe.

‘‘We’ve seen a real shift in trends since then, including significant growth in inflation.

‘‘Most of our customers are adjusting well to the changing outlook and the economy remains strong.

‘‘But some households and businesses will be feeling the pinch from rising costs, especially those that have already had their incomes disrupted by Covid19 during the past two years.’’

Ms McGrath said the sale of Westpac Life had added a oneoff gain of $126 million to the financial result.

However, a significant writeback in impairments that had boosted the result in the prior comparative period had not been repeated.

The bank’s loan book increased 4% to $94 billion, driven by higher mortgage lending which rose 7% to $62.2 billion. Business lending was down 1% to $31 billion.

Ms McGrath said house prices had started to come off their peak. ‘‘Generally speaking, this trend shouldn’t worry recent home buyers who are in it for the long haul, and will give breathing space to firsthome buyers who are exploring their options.’’

On Friday, Westpac’s economists predicted house prices to fall 15% over the next two years.

Westpac NZ’s deposit book increased 6% to $78.4 billion with term deposits rising 5% to $30 billion.

Westpac’s net interest income rose 3% $1.1 billion although its margin fell by eight basis points to 1.98%.

Expenses were up 5% to $564 million due to higher technology costs and data resilience as well as higher risk and compliance costs.

It recorded an impairment benefit of $10 million compared with a benefit of $99 million in the corresponding half.

Westpac’s KiwiSaver scheme increased 8% year on year to $9.3 billion.

The average balance fell 1% to $22,069, partly driven by an influx of new default members with generally lower balances.

Parent company ASXlisted Westpac made a net profit of A$3.28 billion ($NZ3.62 billion) — down 5% compared with the first half of 2021. —