It has reported its profit for the 2016 financial year.
Across the group, its annual profit fell 7%. Within New Zealand, cash earnings dropped 4% to $872 million.
Net interest income rose 2% to $1.7b, driven by a 9% lift in total lending.
More than 90% of lending growth was covered by increased deposits.
Westpac New Zealand Chief Executive Officer, David McLean, said it had been operating in a challenging environment but had returned a solid result.
“Westpac New Zealand delivered a sound performance based on a disciplined approach to risk management and balanced growth,” he said.
“We have focused on quality lending over volume, particularly in housing. This was evidenced by some risk policy changes we were prepared to make and lead the market in implementing policy changes ahead of regulation.”
Westpac was the first to enforce the new Reserve Bank rules on lending to investors and also moved early to shut out buyers relying on foreign income to service their loans.
It also told mortgage advisers last month it would no longer accept any applications for owner-occupier loans when then the deposit was lower than 20%. Banks can lend 10% of their new lending to borrowers with small deposits.
McLean said he expected similar economic conditions through 2017.
The challenges would remain similar, particularly externally, with subdued global demand and the high New Zealand dollar creating challenging conditions.
Reserve Bank rule changes would dampen demand, although the effects could be short-lived, Westpac said in releasing its results.
“Some additional tightening in macro-prudential policies is expected over the coming year in the form of debt-to- income limits on borrowing. With investor activity significantly impacted by new regulations last year, the market is opening up to first and next-home buyers. How any debt-to- income limits might impact first-home buyers in particular will no doubt be carefully considered by the RBNZ.”
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