Catherine McGrath: Westpac CEO on the bank's profit growing by 10 percent

Westpac New Zealand’s profits are continuing to rise, as it makes more money from existing customers, rather than materially growing its business.

The Australian-owned bank’s New Zealand division reported a net profit of $525 million in the six months to March - a 10 percent rise from the same period last year.

Westpac CEO Catherine McGrath explains why New Zealand's margins have gone up - despite Australia taking a dip. 

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Episode Transcript

Speaker 1 (00:00):
Now, Westpac's net profit has jumped ten percent for the
first half of the year. For the company's new New
Zealand arm. The interest rates have been coming down, obviously,
but the bank's margins on interest rates have gone up slightly,
up zero point one six percent compared to the same
period last year. In Australia the margins actually declined. West
Pac CEO is Katherine mcgrahey.

Speaker 2 (00:18):
Catherine, Hi here, That great to be back.

Speaker 1 (00:21):
Hey, thank you very much for your time. What's driving
your profit up?

Speaker 2 (00:25):
So if you look at it versus the previous period, yes,
it has gone up about ten percent in that period
of time, But if you look at it over the
past six months, a net profit has actually gone down
by nine percent, and that's reflecting revenues have been flat,
particularly with strong competition in the deposit market. Our costs
have gone up and impairment has gone up as well.

Speaker 1 (00:48):
And so what's going on here with the margins rising
in New Zealand but going down in Australia. Why is that.

Speaker 2 (00:55):
So? One of it's important to compare apples with apples.
The Australian business has a big Internet proponents to it
which we don't have here and so if I look
at the relevant parts of the Australian business to New Zealand, one,
our net interest margin is lower, and then the reasons
ours have edged up about three points over the past
six months. We've seen some better funding decisions have been taken,

(01:17):
which has been really helpful.

Speaker 1 (01:20):
Interested in the fact that you've called out the social
media companies on scams, what's what's what's got you upset there?

Speaker 2 (01:27):
One of the things I'd love to see them do
is to make sure that when they take advertising dollars
for financial services ads, that they check that those ads
are for genuine financial services providers. We know that investment
scams are the ones that hurt keeps the most for
an amount of money, and so we'd love them to
use their great technology to verify that they're taking money

(01:49):
from people who are actually financial services organizations.

Speaker 1 (01:52):
They're under no obligation to do that, are they.

Speaker 2 (01:56):
No? But if I can go through a piece of
break to try and identify that payment that you intend
to make isn't really one that you want to make,
which is what we're doing in the New Zealand banking industry.
I don't think it's a hard ass to say that
media platforms should make sure that they verify that who
they're taking money from are advertising actually for financial services,
not fake ads.

Speaker 1 (02:17):
Yeah, you, I mean I would say that that's because
you've been pressured into it publicly, right, you actually care
about what your customers think. They don't care, they have
and they have no real there's no real impetus, right that.
There's what I mean, what does it matter if we
think badly of them? We keep on using them, right,
So there's nothing to there's nothing really to pressure them
into this position, is there.

Speaker 2 (02:38):
Well, I think the government is starting to do a
good job at putting that pressure on and it's been
really good to see that one of those platforms has
done that. And so our wit judgement is that Google
has done that and they are verifying all ads. We
would think that was great if all of those technology
platforms demonstrate the same social responsibility to help people stop

(03:01):
being scammed.

Speaker 1 (03:01):
Yeah, totally, I agree with you. Now listen, when are
you guys going to be paying that penalty post the
court case?

Speaker 2 (03:09):
So that will be in the process. Now, that's from
a very historic issue. Not good when we offered something
and we couldn't follow through with it. In terms of
our system, but we've worked very closely with the Financial
Markets Authority. All of those customers have had any money
paid back, and it's not a forward looking issue from
our perspective.

Speaker 1 (03:28):
Cal Catherine, thank you so much for your time. Appreciate it.
Katherine mcgrass, CEO of Voice.

Speaker 2 (03:31):
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