What we learned from ANZ, Westpac and BNZ’s half year profit announcements

Monday, 12 May 2025

Households are increasingly feeling the benefit of lower interest rates as the amount of home loan interest big banks collect from them falls.

ANALYSIS: Westpac, then BNZ, then ANZ reported increases in their first half year profits last week.

The increases came at a tough time for many households and businesses with a big rise in borrowers behind on their home loan repayments.

Nearly $1 billion of home loans are now 90 days or more overdue at the three banks, with ASB having a different financial year.

Mortgagee sales remain low, but an unknown number of borrowers in trouble end up putting their homes up for sale, if they can’t get back on track.

Here are some things the Westpac, BNZ and ANZ half year results presentations told us.

Mortgage crisis is real

Most borrowers manage, even in hard times, but there’s been a rise in desperately struggling borrowers.

ANZ chief executive Antonia Watson reiterated her claim at select committee that the bank did not make super profits.

Overall, the three banks’ past due home loans rose from $4.4b to $4.9b.

That’s about $2 in every $100 of their home loans, but a large part of that rise has been in people that are behind by three months or more.

At the end of March last year, borrowers owing $659 million of ANZ’s $109b of residential home loans were three months or more behind on their repayments. By the same date this year, that had risen to $967m of $113b.

At the three banks combined, the 90 days or more overdue loan weight rose from just under $1.1b to just over $1.4b, and that came despite BNZ’s 90 days overdue total falling.

Once a household is so far behind in its mortgage repayments, it can be very hard to catch up.

These are often borrowers who have lost their jobs, said ANZ chief executive Antonia Watson, and if they have got a new one, it might be paying less.

ANZ chief executive Antonia Watson appear before the Finance and Expenditure Select Committee session earlier this year.

But, she said: “We feel like we're probably near the peak, and we've got a really good team that are really experienced working with our customers that find themselves in that situation.”

And, she said: “Of course they tend to be very well secured.”

Very few get taken to mortgagee sale. ANZ had done just nine mortgagee sales in the six months to the end of March, Watson said.

“We've seen a reduction in our 30 days past, so people are curing themselves faster again now.”

Profits increased

All three posted after-tax profit increases on a year before. ANZ’s was much larger, but the bank said a large part of the 21% increase was from financial gains on foreign exchange and interest hedging contracts.

Banks are not insulated from the economy, but the interest from borrowers keeps rolling in, even if times are tough for households, and even if mortgage rates have fallen.

The interest income booked by the three banks dropped from $13.4b in the six months to the end of March 2024 to $12.7b in the six months to the end of March 2025.

Their biggest expense is the interest they pay to depositors. As interest rates fell, so did the interest banks had to pay to depositors.

That went from $8.6b to $7.8b, a slightly larger fall than the fall in the three banks’ combined interest income.

“A really different thing about banks is that if the economy is bad, and you're Harvey Norman you just see a drop in sales,” Watson said.

“Our revenue doesn't tend to drop.”

However, banks felt economic pain through loan losses, she said.

Households cautious, and overdrawn

Households are being very cautious about their spending. Many are keener to reduce their debts.

Watson said: “As people have extra cash, what we’re really not seeing is consumers spending it. And we’re not seeing businesses invest really at this stage.”

That indicated there was “a way to go” on the economy turning around, she said.

Many home loan borrowers who were refixing at lower interest rates were keeping their repayments the same, to get through their home loans faster, she said.

ANZ and BNZ both reported an increase in the use of overdraft balances, and a decline in credit card use.

Mortgage lending grew faster than business lending

The proportion of banks’ lending to people buying homes continues to grow while the amount lent to businesses continues to fall.

Westpac’s home lending grew 3%, and business lending grew 1%, for example.

BNZ has taken over as the most popular bank.

BNZ’s total lending increased $4.3b, or 4.1%. Its home lending was up 5.6%, and its business lending up 2%.

Households are positive about their banks

BNZ’s parent company, National Australia Bank, which is listed on the Australian ASX sharemarket along with ANZ and Westpac’s Australian parent banks, published bank popularity figures.

It shows all the big five banks had more customers that would recommend it to a friend, than would tell that friend not to bother joining it. BNZ is now the bank with the highest proportion of happy household customers.

Businesses don’t feel that way

Labour’s Barbara Edmonds has expressed concern that $58 billion of money being held in non-interest bearing accounts at banks is boosting their profits.

But only one of the big four banks (Kiwibank is not a big player in the business banking world) has more positive than negative business banking customers. BNZ was ranked the third least unpopular.

Banks have a lot of “free” money

BNZ alone had $15b of deposits held by businesses and households in non-interest bearing accounts.

Labour’s Barbara Edmonds has been considering whether a 1% minimum interest on accounts should be implemented on the roughly $58b of interest-free deposits in banks.

BNZ’s Dan Huggins warned that would probably lead to higher lending interest rates, and/or fees on transaction accounts.

Progress is being made on fraud

Banks have been under pressure to improve the way they protect customers from scams and fraud, and they have been investing heavily in it.

Westpac says its use of technology such as biometric software led to an 11% increase in fraud prevention compared to the same time last year, helping reduce customer losses to fraud and scams by 14%.

However, despite the rush by big banks to beef up anti-fraud and scam protections under pressure from the public and politicians, the New Zealand subsidiaries of Australian banks still seem to be lagging their Australian parents.

Westpac, which reported a drop in customer scam losses of 19%, has just launched dynamic CVC numbers as a fraud protection on its credit cards. It has had that since 2022 in Australia.

Westpac in Australia has now launched an in-app “safecall” feature, to prevent scammers impersonating its staff.