Westpac posts profit lift

Westpac NZ today reported a 4 per cent rise in net profit for the half year ended March 31.  

The New Zealand arm of the Australian-owned bank posted a net profit of $323 million, up from $310 million for the same period last year. 

The bank reported core earnings of $504 million, up from $475 million the year-earlier. 

Westpac chief executive Ann Sherry said in a statement that Westpac had stuck to its policy of not buying market share. The bank largely stayed out of the BNZ-led mortgage rate war that peaked at the end of last year. 

"That Westpac did not trade-off market share against profitability to the same extent as some competitors during the period is reflected in this solid result," she said. 

Residential mortgages were at a record $20.1 billion in March this year, up 15 per cent from $17.4 billion the previous year. Net interest income increased by $17 million or 3 per cent from the same period last year, due to mortgage and deposit volume growth.  

Non-interest expense was flat, rising just 1 per cent or $4 million from the corresponding period last year. Bad and doubtful debts expense rose $3 million, or 17 per cent. The bank's Australian parent, Westpac Banking Corp, today reported an net profit was A$1.325 billion ($1.42 billion), for the six months up 8.2 per cent from the previous first half. 

Meanwhile the bank also announced a change to its share structure. Westpac's New Zealand class shares will cease trading on the New Zealand Stock Exchange (NZSX) in July. 

The bank said it has decided to exercise its right to exchange New Zealand class shares for Westpac ordinary shares. New Zealand class shares are expected to cease trading on July 1 and Westpac plans to establish a New Zealand register on July 11. 

This will allow shareholders to trade its ordinary shares on the New Zealand stock exchange through the FASTER system, as well as on the Australian exchange. 

Westpac NZ shares have been trading at a discount to the ordinary shares and last traded at $19.45. Westpac ordinary shares were yesterday fetching A$19.03c ($20.43c) on the Australian exchange. 

Westpac said in a statement it made the decision after changes to Australian tax rules, which would make the bank subject to Australian franking debits in relation to the NZ class share structure from July 1. 

"It has not been possible to restructure the NZ class shares to ensure there are no adverse implications from an Australian tax or regulatory position while preserving the attractiveness to New Zealand resident shareholders," the bank said in a statement. 

The bank said it would send an explanatory letter to affected shareholders in the next few days with more details on the share exchange process. 

- NZPA