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Speaker 1: We're in for a week of profit announcements from the banks.

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Speaker 1: First cab op the rank is Westpac, who in Australia

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Speaker 1: made seven billion dollars which was down a little bit,

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Speaker 1: but here they made a bit over a billion dollars

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Speaker 1: which was up some ten percent. Banks of course affront

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Speaker 1: and center these days in the halls of Wellington. CEO

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Speaker 1: Katherine McGrath's with us. Catherine, Morning to you, m I Mike,

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Speaker 1: A quick number crunch if we could. Impairment charges are down.

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Speaker 1: That shows a robust sign and the economy people, despite

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Speaker 1: the difficult times, have soaked it up. Is that fair?

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Speaker 2: Yes, Our underlying profits are flat and it's solid results

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Speaker 2: because we've worked really hard to support deries in tough

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Speaker 2: times and they've been more resilient as the economy has

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Speaker 2: been tough for them. But we're really happy that we're

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Speaker 2: well positioned to support them as the economy should start

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Speaker 2: to grow.

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Speaker 1: Home and business lending is up a little bit. Is

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Speaker 1: that a sign of the economy in green shoots and

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Speaker 1: all of that or.

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Speaker 2: Not, it's a couple of things. The housing market has

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Speaker 2: definitely started to pick up, and for us, we've taken

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Speaker 2: market share on business lending from other banks, which I'm

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Speaker 2: delighted about and look forward to doing more of that

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Speaker 2: in the year to come.

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Speaker 1: Okay, the margin in Australia is one point ninety five.

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Speaker 1: It's two point one point seven here, and that's where

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Speaker 1: the government comes in. How do you explain it?

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Speaker 2: So, firstly, you've got to compare apples with apples, and

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Speaker 2: the AUSSI business has a large international franchise which we

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Speaker 2: don't have here. So if I look at their business

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Speaker 2: and consumer and wealth business versus ours, actually our margin

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Speaker 2: or net interest margin is smaller than in Australia.

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Speaker 1: Right, So if we accept that as a reasonable explanation,

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Speaker 1: how come the government don't get that? How come there's

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Speaker 1: an inquiry? How come they're out to get you guys?

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Speaker 2: Well, I think that's for the government to comment on,

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Speaker 2: and I'm looking forward to the Select Committee hearings because

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Speaker 2: it's a great opportunity to be incredibly transparent and talk

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Speaker 2: about all the great market that the Westpac team does

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Speaker 2: supporting New zeal Own communities.

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Speaker 1: And Tony at another bank the other day gave what

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Speaker 1: I thought, and I assume you followed it was a

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Speaker 1: fairly cogent old line. Is your line similar to hers.

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Speaker 1: In other words, the banks speak is one.

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Speaker 2: So I think the way I look at it is

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Speaker 2: banks have really large balance sheets, and we have large

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Speaker 2: balance sheets so that we can help an economy to

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Speaker 2: grow and we fund things like infrastructure. We've put up

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Speaker 2: a one billion dollar fund of our balance sheet to

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Speaker 2: help fund affordable housing. And so when you've got a

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Speaker 2: big balance sheet, your profits are large. And if I

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Speaker 2: look at our return on tangible equity, it's about midpoint

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Speaker 2: of the end at X fifty.

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Speaker 1: Yeah, that's pretty much what she said. Once again, I

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Speaker 1: ask you how come they don't get it? If what

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Speaker 1: you say is right.

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Speaker 2: I can't possibly comment on why the government have a

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Speaker 2: view like that, but our job is to help them

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Speaker 2: to understand and to turn up and answer all their

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Speaker 2: questions to the best of our ability.

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Speaker 1: Do you feel like you're being your head against the

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Speaker 1: brick wall.

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Speaker 2: I'm a returning key we so I absolutely love being

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Speaker 2: at home and my job is to help Westpac growth

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Speaker 2: in New Zealand economy. So no, I'm not bending my

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Speaker 2: head against the wall, and I'm loving helping the economy

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Speaker 2: to grow.

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Speaker 1: What about the ki the Kiwi bank scenario would something

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Speaker 1: big in that department change the market in your view.

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Speaker 2: So I think the market here is very competitive anyway,

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Speaker 2: and any growth out of Kiwi Bank is absolutely fantastic.

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Speaker 2: We're the smallest as the big four banks in New Zealand,

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Speaker 2: so any remedies that the ComCom or the government want

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Speaker 2: to put in place to make competition easy is great

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Speaker 2: from my perspective.

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Speaker 1: Okay, So the other thing that you talk about the

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Speaker 1: green shoots, what you read on the economy as we

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Speaker 1: end the year and enter the next is their hope

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Speaker 1: was survived to twenty five reel.

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Speaker 2: So we're very hopeful about the economy in the year ahead.

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Speaker 2: I think the key thing to watch is unemployment, and

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Speaker 2: we expect that we'll peak halfway through the year. But

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Speaker 2: we do think that twenty twenty five is going to

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Speaker 2: be a better year for the New Zealand economy than

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Speaker 2: we've seen over the past couple of years.

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Speaker 1: Somebody said, I can't remember it was, might have an

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Speaker 1: asp said six percent. Do you see it peaking at

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Speaker 1: six percent?

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Speaker 2: We see unemployment peaking at five point seven.

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Speaker 1: Yeah, exactly. Well, a good time, good time to fix

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Speaker 1: your mortgage. There's the other thing I'm reading at the moment,

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Speaker 1: You've all anticipated, you guys, that Adrian's going to do

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Speaker 1: what Adrian's going to do. So the money market's about

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Speaker 1: where we need to be should we fix long term.

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Speaker 2: So what we've seen customers do is some of them

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Speaker 2: are going on to the variable rate just to wait

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Speaker 2: to see what happens. People are tending to fix a

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Speaker 2: bit shorter than they have done before. But we've reduced

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Speaker 2: our interest rates eight times since July, so it's definitely

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Speaker 2: a watching brief. And the other piece that's pretty exciting

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Speaker 2: is about a quarter of our customers have already rolled

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Speaker 2: on to lower rates by the end of this year,

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Speaker 2: and it will be more than three quarters of them

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Speaker 2: will be on lower rates in twelve months time. So

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Speaker 2: good to see that cost of borrowing coming down.

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Speaker 1: And that is when the money starts to flow. Appreciate it.

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Speaker 1: Katherine Catherine mcguer, who's the CEO of Westpac.

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