The Bank of New Zealand is the latest retail bank to report
improved profits as the need to make provision for bad debts
Australia Bank-owned BNZ yesterday reported an operating
profit of $1.12 billion for the year ended September, up 6%
on the $1.8 billion reported in the previous corresponding
The provision for bad debts fell 35% to $98 million, helping
the bank to cash earnings of $1 billion from $877 million in
The tax-paid profit rose 21.1% to $741 million from $612
Australian-owned banks operating in New Zealand have come
under political fire recently as profits start to improve as
bad debts decline.
BNZ chief executive Andrew Thorburn followed the lead of
other banking chief executives by emphasising in his
commentary the social contribution the bank made to New
The BNZ employed more than 5000 New Zealanders, paid more
than $700 million to local suppliers and in salaries, as well
as paying more than $200 million in tax over the past year.
The strong financial result meant the bank could take pride
in sponsoring institutions and causes like Super Rugby and
Plunket, he said.
Actively targeting customer deposits had seen BNZ strongly
expand its deposit base in the past year. BNZ had increased
retail deposits from $34.1 billion in the pcp to $34.5
billion - an increase of 11%.
"BNZ's drive for local deposits has seen the bank reducing
its reliance on volatile offshore funding markets. Customer
deposit funding is fundamental to maintaining a robust
balance sheet," he said.
Continuing to strengthen the balance sheet was imperative in
the face of lingering global uncertainties, Mr Thorburn said.
While there were signs of stabilisation in New Zealand, the
operating environment remained challenging with volatility in
Europe and uncertainty around the timing of the Christchurch
rebuild - as well as growth concerns in China and Australia,