Shane Solly: Harbour Asset Management expert on the market reactions to Westpac's profit

Westpac New Zealand recently saw a significant profit boost - and it's prompted discussion.

The Australia-owned bank's reporting a 13 percent jump in net profit after tax of of $1.20 billion in the year to September. 

Harbour Asset Management expert Shane Solly explained the market reactions.

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Episode Transcript

Speaker 1 (00:00):
Shane Soli Harbor Asset Managements with US. Hello, Shane, are
you okay? How much can we read into those improved
building permits stats that came out today?

Speaker 2 (00:08):
Yeah, so we saw a bit of a continued bounce
off I low based residential building concents up seven point
two percent over the last month. It's better than expected, Heather,
And really we're getting two months in a row. The
data for last month was actually revised up from five
point eight to six point one, so in stronger.

Speaker 3 (00:26):
The only sort of cadd here is that data can.

Speaker 2 (00:28):
Be quite volatile, so while it's too stronger months, it's
really sort of a tentative evidence that there's residential investment
markets turning higher.

Speaker 3 (00:36):
So good, but we've got a bit more to go. Now.

Speaker 1 (00:39):
What did the market make of west pax profit?

Speaker 2 (00:42):
Well, there was actually a good result. It was better
than expected. But the main reason for it was they
had lower debt. Bad debt charges so particularly the stronger
Australian economy means that baddened up with.

Speaker 3 (00:53):
Debt and payments.

Speaker 2 (00:54):
This is when banks provision for people not paying back
their debt lower than expecting. Impayments are really low. That
we've gone from six basis points to four basis points.
It doesn't sound like a lot, but it's huge in
banking terms. One of the interesting standouts here there was
the Westpac New Zealand profit result bit of a ripper
driven by net interest margin expansion. We actually saw the

(01:15):
west Pact year price up three percent to its highest
ever price in Australia, to thirty nine dollars nineteen Australian dollars.
So big day for Westpac.

Speaker 1 (01:25):
Now we've got the new Chinese economic data out as
well today. Are there any implications there for New Zealand.

Speaker 2 (01:31):
Yeah, it was a bit, makes a bit more slippage
from it's still positive, but it's nothing that's going to
I don't think it's going to really cause major recins
for New Zealand economy. But we continue to see the
ratings dog data, that's what it's called. Seeing the Chinese
factory activity expanding less than expected. So the purchasing manager
and this this is a forward looking index. It says

(01:53):
what people think they're going to do.

Speaker 3 (01:55):
Slip from fifty one point two and September to fifty
point six. All positive.

Speaker 2 (02:00):
It's above fiftyeths expansion exports, that's the issue either that
people wear about this trade uncertainty so to doal back
their export expectations, but they are adding jobs, so that's
a bit of a conundrum and that one side speaker
on the other sides up. So jobs has been a
slow point for the Chinese economy, fastest growth in two
years in the slatest data, so that's a bit of

(02:21):
a change.

Speaker 1 (02:22):
What are we expecting from the unemployment out of this
out on Wednesday?

Speaker 2 (02:25):
Yeah, really big one from the New Zealand market, the
market is expecting potential for ongoing weakness.

Speaker 3 (02:31):
We have seen films, you know, not adding to the growth.

Speaker 2 (02:35):
Of late there's a chance the New Zealand employment rate
could tick up to a nine year high sort of
above five. Five point three is what the pundits are picking,
which is a very interesting number in terms that it's
more than five less than five and a half, So five.

Speaker 3 (02:48):
Point three and if we get to that then that really.

Speaker 2 (02:51):
Gives us a bit more support for another cut by
the Reserve bankings on another twenty five basis points to
two point two, but the markets was introducing that could
be it for the cycle.

Speaker 3 (03:02):
So one last cup on the back of weaker employment data, brilliant.

Speaker 1 (03:06):
Hey, thank you very much for talking us through that
show that's showed Solly Harbor Asset Management. For more from
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