Westpac NZ seeks more agriculture market share 2 May 2016
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ manufacturing activity reaches highest since 04 Business
- Government Widens Drought Assistance News
- NZ economy expands at fastest pace in two years Business
- New Zealand food prices fall in February Business
- NZ dairy herd now matches human population Business
Westpac NZ seeks more agriculture market share despite dairy downturn
By Fiona Rotherham
May 2 (BusinessDesk) - Westpac New Zealand says it wants to lift its market share of agricultural lending over time to 20 percent from the current 12.6 percent.
The Australian-owned bank today reported a steady performance in its New Zealand unit with cash earnings of $445 million for the six months ending Mar. 31, up 2 percent on a year ago.
Overall lending rose 8 percent with a 9 percent lift in business lending to $26.6 billion. Its agricultural portfolio totals $8.1 billion, up from $7.3 billion a year ago with dairy accounting for more than two-thirds of that. Its market share in agricultural lending rose from 12.3 percent in the previous half to 12.6 percent, which chief financial officer Jason Clifton said went mainly to existing rather than new dairy operations.
In an interview with BusinessDesk, chief executive David McLean said he's often asked why the bank wants to lend more on agriculture at a time when the dairy sector is suffering from low global prices, but he said the bank was still underweight in that area and wanted to grow slowly over time. ANZ is the biggest agricultural lender, followed by the BNZ, with Westpac sitting in fifth place.
“There’s a truism in banking that the best time to write loans is at the lower end of the cycle because when you’re writing them at the top end of the cycle the conditions can mask the underlying performance of the business,” he said.
The percentage of the agricultural portfolio graded as 'stressed' rose to 7.81 percent from 3.92 percent last September, although impaired agricultural loans decreased slightly to 0.32 percent.
McLean said he expects losses and impairments to “tick up a bit” in the second half and a third season of low payouts means inevitably some farmers' businesses will not survive.
“But New Zealand farmers are very resilient and have a great capacity to adjust their cost of doing business down,” he said.
Overall impairments for the half were a low $9 million compared to $31 million a year ago.
Westpac was also underweight compared to its peers in mortgage lending growth, which rose 6.3 percent during the first half to $43.4 billion, compared to 8 percent of the overall market.
McLean said the bank was prepared to be cautious on the housing market given the economic outlook. “If a segment of the market is over-heated we are cautious on that”.
He’s picking a two-speed economy to emerge in the second half of the financial year, with the dairy downturn placing a significant drag on export earnings and weighing on industries and communities that service the sector. At the same time, record migration and tourism along with a large pipeline of construction work and historically low interest rates are boosting housing markets in most regions, he said.
Intense competition for new lending and a shift to lower spread fixed mortgages has tightened margins, the bank said. Net interest margins fell 8 basis points during the first half to 2.15 percentage points, driven by increased competition, though Clifton said offshore funding costs have started to flatten in the past six to eight weeks.
Operating expenses also increased $33 million during the half, mainly due to a brand relaunch featuring former All Blacks captain Richie McCaw.
Westpac also has the largest number of smart ATMs among the banks – some 160, with more being rolled out in the second half of the year. Deposits to smart ATMs, which also give change, has risen to 39 percent of total deposits. That's up from 34 percent in the previous half. Although the bank hasn’t yet decided when it will roll out the ATMs' extra functionality, they have barcode scanners that can allow direct bill payment, fingerprint recognition rather than numeric logins, and the potential for video conferencing allowing customers to interact with bank staff face to face if they need to.
Westpac’s group first-half profit rose 3 percent to A$3.7 billion following a hefty increase in capital to meet regulatory demands. Impairment charges rose due to exposure to four large entities which added A$252 million to provisions.
An interim fully franked dividend of 94 cents Australian per ordinary share was declared by the board, an increase of 1 percent on the previous year. It will be paid on July 4.
The ANZ is due to report its half year results tomorrow while the BNZ will report on Thursday.
(BusinessDesk)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more