A recession is looming, but banks have widened lending margins and posted record profits.
Every month, Westpac reaches out to approximately 1,000 borrowers who have seen significant increases in their mortgage payments.
About 50,000 Westpac mortgage borrowers will surrender their fixed mortgages at interest rates below 4% later this year or the first three months of 2023, Chief Executive Catherine McGrath said. said deaf.
They face paying off loans at much higher interest rates, but McGrath said he hasn’t seen any particular improvement for those under stress.
Westpac’s one-year fixed-rate loan has an interest rate of 5.99%, and the two-year interest rate is 6.19% if you own 20% or more of the stock.
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Westpac announced full-year after-tax profit for fiscal 2022 of $1.16 billion, up 12% from the previous year.
This surpasses last year’s results, when banks were profitable. first billion dollar profitafter-tax cash earnings of $1.01 billion.
McGrath said the $1.16 billion profit was “solid” and put the bank in a strong position to support its customers in an uncertain economic environment.
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All borrowers whose mortgages are nearing the end of a certain period will receive a letter from the bank, McGrath said, but will contact the borrowers facing the biggest increases directly.
“We aim to call about 1,000 customers each month, but we believe we can do it with additional help,” she said.
McGrath said Westpac increased its call center headcount, increased branch hours and opened a regional bank hub in Waikato to increase its ability to respond to customer inquiries.
“These things allow us to reach out to customers who are rolling off their fixed rates early and prepare them for the changes ahead,” she said.
McGrath said 68% of mortgage customers had more mortgages at the end of September.
But as households stare into a barrel of recession, with high inflation and unemployment expected to top 5%, the profits of big banks are in the spotlight. tens of thousands lose their jobs.
On Thursday, Treasurer Grant Robertson said: Banking social licenses required banks to support borrowers If times get tough and you find yourself struggling to pay off your mortgage.
Westpac’s profit growth was boosted by the sale of its Westpac Life insurance business, excluding which the bank’s cash income declined by 2%. McGrath said the Westpac Life sale added a one-off gain of $126 million to his financial results.
Westpac has increased mortgages by 5%, business loans by 4% and deposits by 3%, she said.
Customer satisfaction also dropped significantly. The Net Promoter Score is a metric that shows that the number of customers recommending over customers not recommending has dropped to just 7%.
Other large banks not named in Westpac’s earnings call had Net Promoter Scores of 32%, 21%, 23% and 16%.
Robertson’s guidance to banks followed news from the Reserve Bank Te Pūtea Matua on Wednesday that 2% of those with mortgages were leaning toward negative equities as house prices fell.
A borrower has negative equity if they owe more on their mortgage than they can sell the house.
housing prices It’s down 11% from its peak, with Auckland down 15% and Wellington down 18%.and said the Reserve Bank would need to fall further for them to reach sustainable levels.
Westpac is the second major bank to disclose its 2022 profits, following ANZ’s posting. Record-breaking $2 billion profit.
The Bank of New Zealand will release full-year earnings on Wednesday.
The shares of the Australian parent companies of the three banks are listed on the Australian ASX stock market. All companies have large numbers of shareholders, including many pension funds like his KiwiSaver fund in New Zealand.