03 November 2014

Positioned for growth – Investing in the customer experience 

Westpac New Zealand1 Summary financial points – FY14 vs FY13

  • Core earnings increased 3%, to $1,222 million
  • Cash earnings2 of $864 million, an increase of 13%
  • Impairments decreased 78% to $26 million
  • Strong Lending growth of 5% to $64.6 billion
  • Deposits3 growth of 6% to $49.4 billion, maintaining the peer leading deposit to loan ratio of 76.5%
  • Wealth balances increased 24% to $7.2 billion

Westpac New Zealand Cash earnings were $864 million in FY14, a 13% increase compared to FY13. The growth in Cash earnings was supported by a 78% reduction in Impairment charges driven by asset quality improvement, and 3% growth in Core earnings.

Westpac New Zealand Acting Chief Executive, David McLean, said the strong performance benefitted from targeted growth in a competitive marketplace.   

“In a highly competitive environment we have continued to focus on disciplined cost management so we can invest in meeting changing customer preferences through digital, self-service and direct channels. Our focus remains on delivering market leading customer experiences that are seamless across all channels,” he said.

Lending increased 5% over the year with strong targeted growth in mortgages of 6%, ahead of system.4 Westpac New Zealand transitioned well to the above 80% LVR lending restrictions, with new flows for the year ahead of system but comfortably below RBNZ limits. This has been supported by strong growth in the Welcome Home Loans product. Additionally, Business lending increased 4%, driven by targeted growth in Agri at over 2x system.

Deposits growth of 6% has funded over 90% of lending growth maintaining a peer leading deposit to loan ratio of 76.5%. Deposit growth was driven by transactional and call products which were up 12%, primarily in online deposits.  The flexibility these online deposits products provide for customers contributed to Westpac New Zealand being recognised by Canstar with an award for “Best Value Everyday Banking” for transactional services.

Net interest margin (NIM) decreased 6bps to 2.27% during the year, partly due to the inclusion of additional treasury assets5 in the Westpac New Zealand results. Excluding these assets, NIM of 2.29% declined 4bps as customer preference for fixed rate home loans and strong price competition has driven lending spread compression. These trends were mainly offset by improving deposit spreads and lower funding costs.

Wealth balances grew strongly, up 24% to $7.2 billion with a 33% increase in KiwiSaver. The number of Westpac New Zealand customers with a Wealth product increased 120bps to 27.9%. A highlight was the Westpac KiwiSaver Scheme6 being awarded default KiwiSaver status during the second half of the financial year. 

“In a year that’s seen a substantial increase in digital banking and a move to greater self-service, we have continued to invest in our capacity to deliver.” Mr McLean said. The new self-service model has continued to roll out across New Zealand offering greater flexibility and choice for customers.  Westpac New Zealand now has 133 Smart ATMs which is the largest fleet in the country, taking 27% of deposits, of which 34% were after hours.

Westpac New Zealand has a customer-led, digitally backed service strategy to deliver a world-class customer experience. Westpac New Zealand’s internet banking platform includes functionality to apply for home loans, credit cards and personal loans with a 60 second conditional decision response. It can now originate 14 product groups online which has resulted in 10% of all home loans, 39% of personal loans and 40% of credit cards being applied for online in the second half of FY14. Furthermore, the bank’s digital customer communications tool, ‘Symphony,’ now enables over 15,000 customer leads per week and has led to communications with 91% of all customers during the year.

During the year, Westpac New Zealand invested in Business on Demand for SME customers. This is a dedicated team of experienced business bankers focussed on the needs of SME customers. Additional Mobile Mortgage Managers (MMM), up 32%, provide customers with greater flexibility with extended operating hours. During the year, MMMs have delivered an increase of 42% in MMM mortgage applications, which now represent 15% of all mortgage applications.

An exclusive NZ partnership has been formed with Moven this year to further improve customer experience through an integrated suite of tools focussed on financial wellbeing. Westpac New Zealand has also developed the world’s first banking application for account management using ‘augmented reality’, which will bring to life, in 3D images, a customer’s spending patterns on their smart phone. These innovations will provide our 280,000 Mobile banking customers (which grew 28% in FY14) a greatly enhanced customer experience.



New Zealand's broad-based economic expansion has continued, although the pace of growth has moderated slightly from the peak. Falling dairy and forestry prices will present a real challenge for some regions over the year ahead. However, the booming construction sector – not just in post-quake Canterbury – continues to support economic growth. Westpac New Zealand is well placed to grow and support all of our customers through the opportunities and challenges of this economic environment.