BNZ profits rise

The Bank of New Zealand is the latest retail bank to report improved profits as the need to make provision for bad debts falls.

The National 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 period.

The provision for bad debts fell 35% to $98 million, helping the bank to cash earnings of $1 billion from $877 million in the pcp.

The tax-paid profit rose 21.1% to $741 million from $612 million.

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 Zealand.

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, he said.