Westpac looks to grow rural footprint
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Westpac aims to boost market share despite stressed proportion of agribusiness portfolio more than doubling.
Westpac New Zealand is pushing to boost its rural market share, even after the proportion of its agribusiness portfolio classified as stressed more than doubled in the past year amid the dairy downturn.
Speaking yesterday after reporting a 2 per cent lift in half year cash earnings to $445 million, chief executive David McLean said the agricultural sector had “historically been a bit of a gap” for the bank.
Westpac’s agri market share sits at 12.6 per cent, up from 12.1 per cent a year ago but still well below its share of other segments.
“Over time, which could be multiple years, we’d like to see our agri market share get closer to 20 per cent,
” McLean said. “By demonstrating continued support when the sector is under stress, it’s a good time to build relationships with borrowers.”Westpac was, however, taking a measured approach to growing its rural footprint.
“It’s a truism in banking that you write your best loans at bottom end of the cycle and your worst loans at top end of the cycle, when underlying conditions can disguise the performance of particular borrowers,” McLean said. “We’re quite comfortable writing business at this level.”
Westpac New Zealand said the proportion of its agribusiness portfolio graded as “stressed” reached 7.8 per cent at the end of March from 3.9 per cent at the end of September and 2.9 per cent a year earlier.
“The whole market is seeing some stress emerging in that [rural] space,
” said Westpac NZ chief financial officer Jason Clifton.