Bad credit loans hit profit at Westpac NZ

Westpac New Zealand says its interim net profit fell almost three percent to $221 million, reflecting an almost fourfold rise in bad loans.

New Zealand's second biggest bank says non-performing loans have risen to $42 million in the six months to March, from $11 million a year earlier.

The bank says the rise is to be expected. It expects competition to become even tougher as banks slug it out for customers in a slowing economy.

Westpac New Zealand's overall business margin declined to 2.2 percent in the six months to March from 2.44 percent a year earlier.

It says customers switching to fixed mortgages and the migration to high interest online savings were the biggest factors behind the decline. But it also blames the mortgage war and tough competition for credit cards.

Its costs also rose four percent, reflecting restructuring costs, higher advertising expenses from a brand re-launch and higher project amortisation costs.

It was a different story for its parent, Australia's fourth biggest bank. Westpac Australia says first-half cash profit climbed 11 percent to A$1.68 billion.

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