Home prices plummet and rising mortgage rates prompt Westpac to stay open longer

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Westpac will extend opening hours at 74 of its branches.

Kirk Hargreaves / Stuff

Westpac will extend opening hours at 74 of its branches.

Westpac chief executive Catherine McGrath said the bank plans to extend branch opening hours as customers face a difficult year of high inflation, rising interest rates and falling interest rates. real estate prices.

She also hopes the plan will reverse the bank‘s languishing net promoter score (NPS) among retail customers, which is the lowest of the big five banks.

“We can see that clients are looking at what looks like a pretty tough year with rising inflation and interest rates,” she said.

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“Over the next month, we will be moving to extended hours for 74 of our 114 branches. This means the doors will be open 300 more hours per week on the network,” she said.

NPS measures the net likelihood that customers will recommend an organization to others, and is calculated by subtracting the proportion of customers who are “detractors” who give it a rating of 0-6 on a scale of 0-10, the proportion of customers who are “promoters” and rate it from 9 to 10.

Westpac was just 10 in March, compared to 23, 27, 31 and 38 at the other big banks, according to a report published by the bank on the Australian ASX equity market.

Finance and Expenditure Committee / New Zealand Parliament

Reserve Bank Governor Adrian Orr disagrees with the “regret analysis.”

McGrath said the increase in face-to-face banking has led to an increase in Westpac’s NPS in the agricultural and institutional lending sectors.

“What we hear from them is that they want to spend more time in conversations with great people who can help,” she said.

Westpac announced a 9% increase in cash profits for the six months ended March 31, but a 5% drop in after-tax profits, resulting from the bank reversing provisions on loans on which it did not. expected more losses in the previous six-month period.

Westpac's net promoter score remains low compared to other banks, according to a presentation released to investors on Monday, May 9.

Provided

Westpac’s net promoter score remains low compared to other banks, according to a presentation released to investors on Monday, May 9.

McGrath said his clients were resilient despite the changing economic outlook.

“Six months ago, the housing market was still peaking, the Omicron variant had not emerged and Europe was at peace. We have seen a real change in trends since then, including significant growth in inflation,” she said.

“Most of our customers are adjusting well to the changing outlook and the economy remains strong,” she said.

“But some households and businesses will feel the pinch of rising costs, especially those whose incomes have already been disrupted by Covid-19 over the past two years.”

Westpac chief executive Catherine McGrath said recent buyers shouldn't worry about falling property prices as they are

Mark Tantrum/Supplied

Westpac chief executive Catherine McGrath said recent buyers shouldn’t worry about falling house prices as they are “in the long run”.

Home loans increased by 7% and deposits by 6% compared to the same period a year earlier.

“House prices have started to come down from their peak and our economists expect them to fall further before flattening out,” McGrath said.

“Generally speaking, this trend shouldn’t worry recent buyers who have a long-term interest in it and will give some respite to first-time homebuyers exploring their options.”

McGrath said the sale of Westpac Life gave the bank a one-time boost of $126 million.

But a major reversal in write-downs that had boosted the result in the previous comparative period – when the bank announced a 98% increase in profit – was not repeated.

Funds under management for Westpac’s KiwiSaver program increased 8% year-over-year to $9.3 billion.

But his average balance fell 1% to $22,069.

McGrath said this was partly due to an influx of new members who transferred when Westpac became a default program.

Following criticism from Reserve Bank of New Zealand Te Pūtea Mataua, Westpac overhauled its board of directors and tightened risk management processes.

“We have devoted a great deal of attention and resources to risk, technology and regulatory compliance,” McGrath said.

“We have commissioned independent reviews of our liquidity risk management and risk governance as required by the Reserve Bank of New Zealand and are making good progress in addressing issues in these areas.

“At the same time, we have a number of new faces on our renewed board and leadership, and it’s exciting to gain these new perspectives as we look to the future.”

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