Wellington, May 6 NZPA - Westpac New Zealand reported a 15 percent fall in first half net profit to $202 million, as impairment charges rose by $123 million to $184 million.

Core earnings, before tax and impairment charges, for the six months to the end of March rose 13 percent from a year earlier to $471m.

That reflected increased growth in business combined with disciplined expense management, the bank said today.

The rise in impairment charges was attributed to the continued deterioration in the New Zealand economy.

Announcing his first set of results since joining in March, Westpac New Zealand chief executive George Frazis said the bank was seeing more pressure across its business customers and expected consumer stress to grow as unemployment rose.

As a result impairment charges were expected to stay at a high level throughout the second half of 2009 and into 2010.

There was little indication wholesale funding costs were easing from current high levels and the cost for retail deposits was increasing.

While it appeared some of the severe stresses of the financial crisis had stabilised, the more dominant impact on Westpac New Zealand would be the size and duration of the recession.

Slower loan growth was expected, consumers and businesses were expected to de-leverage their balance sheets, and it was expected more customers would come under pressure as the effects of the slowing activity become more widespread.

Westpac New Zealand said business lending grew 9 percent in the first half, mainly through agri, infrastructure and small/medium enterprises.

"We have provided an additional $350m over the last six months to help small businesses invest, grow and protect jobs. This is the benefit of having a strong, highly-rated local bank in New Zealand," Mr Frazis said.

Deposits grew 6 percent in the half year, despite increased competition for retail term deposits and an altered playing field with the introduction of the government's retail deposit guarantee scheme.

Housing lending grew 3 percent, reflecting a slowdown in mortgage growth and consistent with the general trend of households looking to reduce debt levels in the current environment.

Customer growth had continued, at an annualised rate of around 3 percent, in the first half of the year, with particular success in new product bundling offers.

"Westpac New Zealand remains determined to grow, and we will look to achieve this through a renewed focus on our customers and investing in our front-line capability," Mr Frazis said.

Local bankers would be given more authority to make decisions quickly, allowing them to more easily help customers.

The company had made a commitment to having more than 50 new business bankers in place around the country by the end of the financial year, as well as a further 70 frontline-facing staff in agri and consumer roles in the next 12 months.

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