Westpac NZ delivers balanced financial result

Core earnings for the 12 months ended 30 September 2019 fell 1% on the same period last year, amid strong competition and increased investment in technology, risk and compliance systems.

Westpac New Zealand (Westpac NZ) has delivered a balanced financial result, following a continued focus on achieving the best outcomes for its customers and New Zealanders.

Core earnings for the 12 months ended 30 September 2019 fell 1% on the same period last year, amid strong competition and increased investment in technology, risk and compliance systems.

However, a continued low level of impairments and the sale of Paymark supported a rise in cash earnings.

Westpac NZ Chief Executive David McLean said low-interest rates were providing opportunities for first home buyers and others looking to make a move in the property market.

"We've never seen interest rates this low in New Zealand. It helps with housing affordability and business investment, and presents a great opportunity for existing borrowers to pay down debt."

Two-thirds of Westpac NZ customers were ahead in their mortgage repayments by a median average of eight months, or an average of $8,652, at 30 September 2019.

However, low rates had also meant savers, many of whom rely on deposit interest to supplement their retirement income, saw their returns reduced.

Business conditions had deteriorated in the second half of the reporting period based largely on uncertainty about the outlook into next year, Mr. McLean said.

"Although significant risks exist globally, the local economy remains in reasonable health, our business is fundamentally sound and our balance sheet continues to be well managed."

Focus on customers

Mr. McLean said a continued focus on innovation had increased the range of digital tools available to customers.

"Our biometric onboarding tool Easy ID allows people to open an account quickly, simply and securely using facial recognition technology. We've introduced Apple Pay which enables eligible customers with an iPhone or eligible Apple device to make contactless payments, and we've also created beContento – an app that keeps track of possessions and could help with insurance needs."

Mr. McLean said changes to an Agile structure for Westpac NZ's technology, product and marketing teams meant they were better positioned to drive innovation forward.

"We're now equipped to bring products and services to market more quickly, with a view to providing great outcomes for our customers."

Westpac NZ had also become the first bank to launch a dedicated mortgage product aimed at helping Kiwis into prefabricated homes. "Prefabricated homes generally cost less and can be built quickly, helping with affordability and housing supply."

Westpac NZ's focus on customers saw it named Canstar's Bank of the Year for Everyday Banking, winning the award for the fourth year in a row, while the Westpac KiwiSaver Scheme placed first-equal in a KiwiSaver customer satisfaction survey released by Consumer in April this year.

"Our 'Value Me' programme provides our customers with data-driven insights, to help them get greater value from their bank account, credit card or Westpac KiwiSaver Scheme fund, and even pay off their home loan quicker. During the past year we've proactively contacted more than 380,000 customers through this initiative," Mr. McLean said.

Westpac NZ had continued to focus on simplifying its business by reducing or removing 13 fees in the past year and removing five products from service or sale. It was also proactively identifying and remedying historical issues with some products and services.

"New complaints are being resolved faster and we've stepped up our training in achieving great outcomes for customers, with the second wave of mandatory workshops rolled out to employees – including non-customer facing roles – in the past few months."

Mr. McLean said Westpac NZ had continued to work constructively with the Financial Markets Authority and Reserve Bank of New Zealand, in relation to the regulators' recent Conduct and Culture Reviews of the banking and life insurance sectors.

Mr. McLean said he had received notification from the Reserve Bank in late October that Westpac New Zealand Limited (WNZL) had satisfied Section 95 requirements relating to internal credit model methodologies. As a result, WNZL would retain its accreditation to use the relevant internal capital models, and would no longer be subject to a two percentage point capital regulatory overlay.

"We have worked constructively with the Reserve Bank on this issue in some detail and are pleased with the outcome."