The bank's earnings have dropped almost by half
Westpac NZ’s profits have been hit hard by COVID-19, with the bank reporting a 44% drop in half-year profit for the six months to March 31.
Net profit after tax dropped from $509 million the the corresponding period last year to $256 million, and cash earnings took a 47% dive to $295 million.
Meanwhile, operating expenses rose by 13% to $541 million, and impairment charges rose from $14 million in the previous period to $211 million.
Despite the heavy impact of Covid-19 on earnings, Westpac NZ chief executive David McLean says that he remains confident of the bank’s financial position, and of New Zealand’s ability to recover from the “once in a lifetime” downturn.
“Despite the very serious financial impact that will be felt by many as a result of COVID-19, we’re confident New Zealand is well positioned for recovery, having entered the crisis in a sound economic position and having responded to the pandemic very well,” McLean said.
“Westpac NZ has both the financial strength and the commitment to New Zealand to help support the economy to recover. Nevertheless, the COVID-19 impact on the economy will be felt in banks’ financial performance.”
McLean noted that although the impacts of the pandemic only emerged towards the end of the half-year, those impacts were very significant. Westpac has been part of various financial relief initiatives for customers as of April 2020, and has granted mortgage and personal loan holidays to over 20,000 customers on loans totalling $7 billion.
It has also offered $1.4 billion in new lending to over a thousand business customers, and has received over 600 applications for the government’s recently announced Business Finance Guarantee Scheme.
McLean says that all-time low interest rates will also help cushion the financial blow for many homeowners.
“Interest rates remain at all-time lows, which will help soften the impact on borrowers whose incomes have been reduced, and wage subsidies and mortgage deferrals give households and businesses time to regroup,” he said.
“COVID-19 is forcing us, and many others, to work in a completely different way and it’s exciting seeing how our teams are responding to the challenge. I’m confident our organisation will be more agile and resilient when we emerge from the COVID-19 era.”
