Westpac NZ says normalised year net profit up

Westpac Banking Corporation said today that its New Zealand operations had made a net profit of $462 million compared with $614 million a year earlier when returns were boosted by the sale of its AGC loan book.

The AGC sale contributed a one-off gain of $105 million last year.

It said normalised net profit after tax rose $72 million, or 14 per cent, to $581 million in 2003.

The 2003 result included the one-off transfer in June of a general provision of $178 million for bad and doubtful debts.

New Zealand chief executive Ann Sherry said the company was not prepared to buy volume growth for its own sake in a market with "compressed margins and strong competition".

Westpac decided not to try and buy the National Bank of New Zealand, which ANZ bought this week for an effective $6.25 billion.

She said Westpac had sustainable earnings despite expecting further compression of margins in the first half of 2004.

MORE WGT sml ob


Ms Sherry said net interest income had increased by 13 per cent, or $118 million, on the previous year, driven by lending growth in housing -- including record levels of housing loans at $16 billion in the second half of the year -- and complemented by good results in farm and business lending.

A lift in transaction levels was largely responsible for the 10 per cent, or $47 million, increase in non-interest income, after exclusion of the AGC sale profit from the 2002 result.

Bad and doubtful debts expenses, other than the one-off general provision, fell by 32 per cent or $13 million largely because of increased recoveries over the previous year.

Non-interest expenses rose 2 per cent, or $14 million, to $699 million because of the relocation of corporate functions and staff to Auckland, and the re-branding from WestpacTrust to Westpac.

Total assets at September 30 were $39.7 billion, an increase of $2.2 billion on the prior year and largely driven by increased loans.

Total revenue for Westpac's Institutional Bank (WIB) was up 11 per cent or $26 million.

Westpac's online banking had an extra 100,000 people signed up on the previous year at 326,000 customers, although Ms Sherry said the bank would also open more new branches in 2004.

- NZPA