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Westpac first half profit tops $4 billion

NZN 1/05/2016 Fiona Rotherham

Westpac's first-half profit rose 3 per cent to $A3.7 billion ($NZ4.03b) following a hefty increase in capital to meet regulatory demands which came at the cost of returns while its New Zealand division lifted cash earnings by 2 per cent to $A445 million ($NZ484.41m).

Group cash earnings were A$3.9b, also up 3 per cent for the six months ended Mar. 31, the Australian company said in a statement.

An interim fully franked dividend of 94 cents Australian per ordinary share was declared by the board, an increase of 1 per cent on the previous year. It will be paid on July 4.

Chief executive Brian Hartzer said the group had delivered a sound result despite significant regulatory change with increased customers numbers and a tighter control on costs.

Its New Zealand division increased cash earnings by 2 per cent on a year ago to $484.41m, as it continues to grow in line with the market while steadily expanding its wealth and insurance business.

Intense competition for new lending and a shift to lower spread fixed mortgages has tightened margins, the bank said.

Despite deteriorating conditions in New Zealand's dairy sector, asset quality had remained sound with impaired assets-to-total committed exposure (TCE) reducing 6 basis points to 0.35 per cent and consumer delinquencies remaining at near historic lows.

Its agricultural portfolio totals $9.36b, up $1.09m on the previous half and accounting for 7.9 per cent of the bank's TCE.

Westpac NZ's lending market share remained steady - it has a 20 per cent share of consumer lending, 21 per cent of deposits, and 16 per cent of business lending. Lending increased $2.6b or 4 per cent from the previous half and 7 per cent on a year ago.

Mortgages lending rose 3 per cent from the previous half to $43.4b and business lending was up 5 per cent from the previous half to $27b.

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