Profit rises as bank lifts lending, first-home buyer support
Westpac New Zealand has reported higher profit and balance sheet growth for the six months to 31 March, while increasing support for households and businesses in a softer economy.
Net profit rose 4% year-on-year to $545 million, although it was 19% lower than the previous six months as the bank increased impairment provisions and absorbed margin compression following official cash rate reductions.
Net operating income was up 4% to $1.56 billion, and net interest margin edged up three basis points over the year to 2.29%.
Chief executive Catherine McGrath (pictured) said Westpac NZ increased total lending by 6% and deposits by 3% compared to the same period last year, helped by stronger home and SME momentum.
“We’ve grown faster than the market in home and small-to-medium business lending as we compete hard to help more customers into their own homes, grow their businesses, and support New Zealand’s economic recovery,” McGrath said.
Home lending rose 5% to $73.3 billion, business lending 6% to $35 billion, and deposits to $83.7 billion.
At group level, Westpac’s broader 1H26 result showed a Level 2 CET1 capital ratio of 12.4% and stressed exposures down to 1.16% of total committed exposures, underscoring the parent bank’s capacity to support its New Zealand operations through a period of volatility.
Customer support and first-home activity lift
Westpac NZ highlighted growth in savings and investment products, with nearly 6,000 customers opening Notice Saver accounts at a 3.00% rate that was held through recent OCR cuts, and strong recent performance across its KiwiSaver funds.
The bank also pointed to more than $5 billion of discounted sustainable business and farm lending since 2023, and over $300 million of interest-free Greater Choices home loan top-ups to help households cut energy costs.
A flat housing market and relatively low mortgage rates have created openings for new buyers, with Westpac financing 3,121 first-home purchases in the half and surpassing its 2024 goal to increase affordable housing lending by $1 billion.
“Kiwis have shown themselves to be resilient and adaptable to events beyond their control in recent years, and the current situation is no exception,” McGrath said.
Economists see OCR at 3% by year end
Westpac’s economists now expect the interest rate cycle to turn higher again, forecasting 0.25 percentage point OCR hikes in September, October, and December, taking the benchmark to 3% by year end.
“Our economists now expect GDP to shrink by 0.4% in the June quarter, with unemployment and inflation to peak at 5.6% and 4.5% respectively in the middle part of this year,” McGrath said, citing the impact of the Middle East conflict and higher fuel costs.
She added that New Zealand entered this period with some momentum and that stressed business lending and housing delinquency rates are lower than a year ago, leaving Westpac NZ “well-placed to help customers not just navigate the current challenges but capitalise on what we think will be better economic conditions later this year and next.”
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