Revenue and lending growth offset rising costs
Westpac New Zealand has posted a 13% lift in annual profit, driven by stronger lending growth and lower bad debts, even as expenses rose.
The bank’s net profit increased to $1.197 billion, up from $1.061 billion last year, while net income rose to $3.089 billion from $2.869 billion. Expenses climbed to $1.471 billion, reflecting higher staff, technology, and software amortisation costs.
Westpac NZ reported an impairment benefit of $44 million, compared with a $27 million charge the previous year, reflecting improved credit conditions. Its net interest margin lifted 15 basis points to 2.32%, as funding costs eased.
CEO Catherine McGrath (pictured) said the result reflected progress across the bank’s key customer segments despite ongoing economic uncertainty.
“This result positions us well to support customers through what we think will be an economic upturn over the coming year, and we are investing heavily in our business to deliver better services for customers and communities,” McGrath said.
Home and business lending expand
Westpac NZ said home lending rose 5% over the year to $71.3 billion, while business lending grew 2% to $34.2 billion. Deposits were up 2% to $81 billion.
“Our focus on growth in key customer segments has helped drive our result," McGrath said.
"For example, we've increased our lending to small and medium businesses nearly five times faster than the market, highlighted by $770 million of new business lending in the September quarter – one of our strongest ever quarters of growth.”
Customer confidence also showed signs of improvement.
“Our data shows a higher proportion of home loan customers are at least three months ahead on their home loan repayments than six months ago, following nearly three years of decline,” McGrath said.
“The average customer is nearly 11 months ahead on repayments, with an average ‘buffer’ of almost $12,000. Housing arrears and the number of customers being supported by Westpac’s financial hardship team are also down on the 2024 financial year.”
Investing in digital, community banking, and fraud prevention
McGrath said the bank had invested heavily in digital services and expanded its “points of presence” across New Zealand.
“Examples of that investment include improving digital services and expanding our points of presence around New Zealand through innovative new face-to-face community banking initiatives,” she said.
The bank has launched and expanded mobile non-cash community banking vans – now operating in Southland, with new vans rolling out in Northland and Canterbury and a fourth planned for 2026. The new services will cover towns including Mangawhai, Wellsford, Waipu, Kawakawa, Paihia, and several Christchurch-area locations.
Westpac has also introduced new anti-fraud tools, lifting fraud prevention rates by 27% over the past year.
Economic outlook: gradual recovery expected
Westpac NZ economists forecast GDP growth of 1.2% in 2025, rising to 3% in 2026 and 3.4% in 2027, as the full impact of interest rate cuts flows through to households and businesses.
“Business and consumer confidence remains subdued following the contraction of GDP in the June quarter,” McGrath said.
“However, indicators suggest that the economy has returned to growth in recent months. That growth remains uneven, with strong commodity prices boosting the regions while the urban centres struggle with sluggish construction and service industries.”
She noted that around 40% of fixed-rate home loans are due for repricing in the next six months, which could further influence spending and refinancing behaviour.
“Despite the economic gloom through much of 2025, we think next year will be a better year. We'll continue to support households and businesses with competitive pricing, expert personalised guidance, and products and services that better meet their needs,” McGrath said.
Capital position and customer resilience
Westpac NZ’s provision for expected credit losses fell $54 million year-on-year to $444 million, while total capital increased $529 million to $11.864 billion. Its cost-to-income ratio improved slightly to 47.62%.
“We think all this will add up to increasing consumer and business confidence and therefore higher spending to stimulate economic activity as we head into 2026,” McGrath said.
For more information, read the Westpac media release.
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