Booming first-half profit for WestpacTrust

By RICHARD BRADDELL banking writer

WestpacTrust has continued its run of record profits, reporting a $30 million jump in net earnings to $216 million for the first half ended March 31, up 16 per cent on the same period last year.

The strong half-year, from the only New Zealand bank yet to have broken $400 million for an annual profit, was again due to the bank's performance in the corporate market, as well as in business and agribusiness.

Chief executive Tom Gallagher said sluggish conditions in the housing market had been tackled with special home-loan packages and a specialist unit aimed at attracting mortgage brokers. That had boosted sales in the first quarter of this year.

But the bank's net interest income, which rose 6.4 per cent to $443 million on strong asset growth, would have been better had interest lending margins not continued to compress.

The New Zealand retail segment's net profit, which includes non-corporate business activities, fell from $170 million for the six months ended September 30, 2000, to $160.5 million in the six months to March 31. Year on year, business volumes were up 7 per cent, although overall retail deposits and lending rose only 4 per cent.

"The point I would make is that [business banking] is coming off a much smaller base," Mr Gallagher said in explanation of the relatively subdued retail performance.

He said a modest 3.1 per cent rise in non-interest income to $229 million belied strong growth in funds management income, with WestpacTrust experiencing the largest net inflow in retail funds management in the 12 months to March.

But non-interest income was also pruned back by fee cuts.

Mr Gallagher said the bank was continuing to work at improving customer perceptions which, according to Auckland University research, are at the lowest of the big banks.

While the majority of customers thought it was doing a good job, he acknowledged there was room for improvement.

WestpacTrust has led internet banking, in 12 months nudging close on 100,000 customers.

A 30Ac a share imputed dividend will be paid to WestpacTrust Investments shareholders, 2Ac higher than the last dividend paid by Westpac Banking Corporation.