Westpac's 41% earnings leap

More market share in deposits and loans helped drive the 41% rise in net profit at Westpac over the last year.

The bank has revealed net profit for the year to September rose 41% or $132 million to $454 million.

Revenue rose 10% to $884 million, or $674 for each of its 1.26 million customers.

Chief executive George Frazis said the balance sheet was buoyed as the bank outperformed the market in deposit and loan growth.

Home lending growth of 2.4% was more than double that of the overall market and business lending grew by 2.5% in a market that shrunk by 0.1%.

The competitive retail deposits segment grew 10% against market growth of 7.8%, improving the bank’s deposit to loan ratio from 60% 6o 64%.

Bad debt charges fell $111 million or 32% to $236m for the year, helped by ongoing improvements in the economy.

Westpac’s Australian parent bank joins other major transtasman banks Commonwealth Bank and National Australia Bank in reporting profit increases, with net profit rising 10% to $A6.9 billion ($NZ9.08 billion)

The cost of natural disasters in both countries during the first half of the year was about $A100 million, the bank said.

Speaking more broadly about the economy, Mr Frazis said it was a “bumpy ride” ahead as international events beyond New Zealand’s control had the potential to disrupt the recovery.

Westpac forecast GDP growth of 3.7% for the next year as employment levels improved.

“New Zealand is in a fortunate position, with a successful World Cup leading into sound GDP growth forecast for 2012.”

Westpac group chief executive Gail Kelly said Westpac had not been directly affected by European sovereign debt issues and direct exposure to Europe (including the UK) was very small.

Nevertheless, Westpac was not insulated from the flow-on consequences of issues in Europe, which include increased volatility in financial markets, a reduction in the risk appetite of investors globally and materially higher
wholesale funding costs, she said.
 

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11 Comments & Questions

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An increase in profit of 41% is entirely obscene in the current market place.

Maybe it's about time they reduced their margins and fees. They can't have it all ways - they are still charging excessive funding margins related to the GFC when they no longer have to pay a premium to source offshore wholesale funding

Daylight robbery

Why isn't the Reserve bank giving Westpac ASB and BNZ the hard word on excessive margins

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Exactly

The Government should also wade in and let them know of their displeasure and that unless Westpac change the Government will transfer it's business from them to Kiwibank.

Ah i forgot - Simon Power is about to join Westpac Bank so that is unlilely for the forseeable future

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How studip can the Labour party staffers get?

Kiwibank needs Westpac to do a HUGE amount of it's back office logistics - so your logic is flawed.

As for profit margins - good on them. All business's need to make a profit - and that profit is not put into any kind of context e.g.

What percentage of return on investment is that profit? Risk v's reward?

Go Westpac! I hope they're generous at bonus time...

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You are a greedy retard - this has nothing to do with politics - obviously it might to you from your response

All that blogger was insinuating was that Westpac should only be making a fair return not one created by extortion without the backing of a proportionate return to teh risk involved.

Answer me one question - why are Westpac charge a far higher margin to NZ customers than they do in Australia ?
Answer - because this isa nother reason wht they are proving themselves as greedy faarks

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Yeah much better the banks make massive losses like in Europe and US.

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To make matters worse this 41% increase is after paying the fat cat senior management huge bonuses - obscene bonuses

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This is why my late Dad told me to invest in stuff that you buy and use. If it does well you get some of your costs back. So Ive always invested in places I spend money like Westpac Contact AIA Briscoes Warehouse etc

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Glad I bought shares in Westpac - maybe I sholuld get some more.

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Actually Anonymous 1, look at the detail of what's written or don't both us with stupid populist crap trap. Bad debts improved by $100m and more importantly they grew their market share i.e. they took profits away from their competitors. How did they do that, maybe through the lower margins that you state are needed, or innovation, or just plain hard work - I frankly should be buying their shares

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Good on them. Banks are a business. They need to make money. Don't like it? Go buy some of their shares and benefit from it. Or we could always have Banks like Europe and the US? I'd rather have a profitable banking system, than unprofitable, stupid to think otherwise.

I do agree there profits are raising a bit high - but they have shareholders to look after - don't agree with it? Become a shareholder.

KiwiBank doesn't have the institutional banking arrangements for the Government Branch like the Aussies - especially ANZ the largest institutional player in NZ and more-so in Asia - the other major players here really is BNZ and Westpac.

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A predatory, ultimately unproductive, activity like quasi-monopolistic (cartel) capital mis-allocation is carried out at the expense of the productive, not for their benefit. So no, bank profits in this environment are not a good sign .... like the growth of a cancerous tumour is bad sign.

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