Westpac NZ makes $494 million loss

Westpac made a $494 million loss after tax in New Zealand for the year to September compared with a $682m profit last year.

The numbers are revealed in the bank's general disclosure statement issued yesterday, and differ markedly from the profit result it announced last month.

Westpac said then that its tax-paid profit had about halved to $236m. But those accounts were for its retail business only, and excluded the institutional part of the bank, which, unlike the other main banks, reports via the Australian parent.

Crucially, the separate institutional business carried a $918m tax provision relating to some foreign lending, which the High Court in October found to be tax avoidance.

Westpac is appealing against the decision.

Westpac New Zealand chief financial officer Richard Jamieson said the bank was well positioned to take advantage of an improving economy over the next year.

He said lending impairments had shown some improvement in the fourth quarter compared with the preceding six months.

The bank expected impairments would continue to improve, along with general business sentiment that the economy was recovering.

"But we are also quite conscious that the market is quite fragile, so we are not counting our chickens at this stage," Mr Jamieson said.

"It has been a tough year, but we certainly believe within Westpac that we are quite well positioned to move into the calendar year ... and enjoying the benefits of an improving economy.".

Massey University head of banking studies David Tripe said the underlying result for the Westpac's entire New Zealand business was "remarkably good" despite the bottom-line loss. If the $918m tax provision was added back in and the spike in doubtful debt provisions adjusted, underlying profitability was about $900m.

Mr Tripe said last month that in the interests of transparency the tax liability should have been disclosed in the Westpac NZ result.

- © Fairfax NZ News