2 November 2011



Westpac New Zealand’s milestone performance in milestone year

Westpac New Zealand continues to grow market share across all key products and customer segments reporting a 41% rise in net profit to $454 million for the year ended 30 September 2011.

The strong result in a stable economy includes a 10% rise in *core earnings to $884 million, an 8% lift in operating income and a 32% reduction in impairment charges.

Westpac New Zealand Chief Executive George Frazis said the bank’s customer focused strategy with local decision making and an on-going simplification of processes, was the foundation of the strong performance.

“The continued investment in people to ensure we have the best bankers making the best decisions along with our determination to make things easier, faster and more convenient for customers continues to gain traction with the market,” Mr Frazis said.

“Our growth has been balanced with home lending and deposits both growing ahead of market while margins have been well managed. The focus on managing the quality of the asset book has seen impairments reduce significantly.”

Westpac group Chief Executive Officer Gail Kelly congratulated the New Zealand team on its performance in its milestone 150th anniversary year.

“It’s a strong performance from New Zealand and there is real momentum within the business,” Mrs Kelly said.

Westpac grew share and outperformed the market in all major categories. Home lending grew 2.4% in a market that grew only 1.2%. Business lending grew by 2.5% in a market that contracted by 0.1%. Within this agribusiness contributed growth of 4.5% in a market that contracted by 0.8%.

Retail deposits continue to be highly competitive with growth of 10.4% against a market growth of 7.8%. This fully supported the loan growth improving the bank’s deposit to loan ratio from 60% to 64%.

Revenue grew 8% to $1,668 million with net interest margin improving consistently through the year gaining 22 basis points to 2.33%.

Operating expenses rose 5%, reflecting additional investment in the distribution network which supported revenue growth. This included the opening of six new community branches, improvements in IT infrastructure and the continuing rollout of 24/7 banking innovations to enhance sales and service.

The quality of the credit portfolio continued to improve due to lower stressed assets and falling delinquencies contributing to a 32% drop in impairment charges.

Mr Frazis said many of Westpac’s customers experienced a particularly difficult year in the wake of the devastating Christchurch earthquakes.

“In addition to providing care and support in the immediate wake of each quake, primarily with the Salvation Army, we looked at how we could help individuals and businesses get back on their feet. I was very proud of the creative ways in which our business responded,” Mr Frazis said.

In addition to financial support packages made available to staff and customers, mobile ATMs were deployed to provide those stranded in the suburbs with no access to cash. Westpac had to close three of its 24 branches in the region while a container was converted into a temporary branch gaining recognition and praise for its innovation.

The Canterbury Care Fund was established and $2 million was donated to it to provide emergency care in partnership with the Salvation Army. In addition, the Canterbury Care Fund provided grants to help re-establish community groups and facilities. The 2,600sqm Westpac Business and Community Hub was also built with key partners to provide office space and free services for Christchurch businesses to get back on their feet. This facility is approximately the size of a rugby field.

Westpac will continue to play a prominent and practical role in the recovery of the New Zealand economy. Central to this is the ‘Grow New Zealand’ programme which is designed to move businesses from ‘caution to confidence’ and to begin investing for growth. Westpac will provide thought leadership and support in three key areas – civic leadership, non traditional infrastructure and tertiary based financial education for businesses.

Mr Frazis said global events beyond New Zealand’s control had the potential to disrupt the recovery. New Zealand is in a fortunate position, with a successful World Cup leading into sound GDP growth forecast for 2012. Westpac is positioned to assist New Zealanders and New Zealand businesses to move forward with confidence.

* Core earnings is operating income less operating expenses