Westpac half year cash profit up 9pc to $635 million

Westpac has released its half year result. Photo / File

Westpac New Zealand made a cash profit of $635 million for the six months to March 31 - up 9 per cent 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 per cent to $504m due to lower impairment benefits and higher spending on risk and compliance projects.

The net profit of the WNZL Banking Group was down 5 per cent to $497m.

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 Covid-19 during the past two years."

McGrath said the sale of Westpac Life had added a one-off gain of $126m to the financial result.

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

The bank's loan book increased 4 per cent to $94 billion driven by higher mortgage lending which rose 7 per cent to $62.2b. Business lending was down 1 per cent to $31b.

MGrath said house prices had started to come off their peak and its economists expected them to fall further before flattening.

"Generally speaking, this trend shouldn't worry recent home buyers who are in it for the long haul, and will give breathing space to first home buyers who are exploring their options."

On Friday Westpac's economists predicted house prices to fall 15 per cent over the next two years.

Westpac NZ's deposit book increased 6 per cent to $78.4b with term deposits rising 5 per cent to $30b.

Westpac's net interest income rose 3 per cent $1.1b although its margin fell by eight basis points to 1.98 per cent.

Expenses were up 5 per cent to $564m due to higher technology costs and data resilience as well as higher risk and compliance costs.

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

Westpac's KiwiSaver scheme increased 8 per cent year on year to $9.3 billion. The average balance fell 1 per cent to $22,069 partly driven by an influx of new default members with generally lower balances.

Parent company ASX-listed Westpac made a net profit of A$3.28 billion - down 5 per cent compared to the first half of 2021.

Its cash earnings also fell and were down 12 per cent to A$3.095b.