Westpac says more mortgage customers face higher rates

“We've made good progress, but there is still more to go,” chief executive Catherine McGrath told TMM, adding that the majority of fixed-rate customers have opted for one-year terms.

Westpac's floating rate is currently 8.64% and its fixed rates between six months and two-years are all above 7% with the standard one-year rate at 7.95% and its “special” one-year rate at 7.35%, although most customers would qualify for the latter rate.

But many customers still face one more step up in rates. Westpac is expecting this process will be completed by Sept 30 next year, McGrath says.

But 67% of mortgage holders are still three months ahead on their repayments, she says.

The bank has been reaching out early to customers needing to reset at higher rates.

The bank's latest annual results showed that 91% of its mortgage customers are on fixed rates.

Mortgage lending accounted for 66.3% of total net lending at Sept 30, up fro 65.9% a year earlier.

On Monday, Westpac reported an 18% fall in annual net profit to $963 million but McGrath says that's for the group of NZ entitities and not the figure it will publish in the Westpac New Zealand subsidiary's disclosure document later this month.

The comparative figure Westpac used for the 2022 financial year of $1.17 billion compares with the $1.05 billion reported in last year's disclosure statement – all three of the other major banks and the government-owned Kiwibank report their statutory results when they announce them.

Westpac's failure to do so effectively renders its results meaningless for comparative purposes – the statutory result is the only one with mandated accounting rules.

Westpac said its deposit-to-loan ratio fell 12 basis points to 80.4%, meaning it had to tap the wholesale markets for the additional funding.

Chief financial officer Tania O'Brien says that while global wholesale markets have been volatile, the bank has had no difficulty in accessing these markets.