BNZ was the latest of New Zealand's major overseas-owned
banks to report its interim profit yesterday, continuing the
trend of increased profits reported by both ANZ and Westpac.
BNZ reported an operating profit of $585 million in the six
months ended March, up 22% on the previous corresponding
A significant reduction in the amount the bank put aside for
bad debts lifted the reported profit by 32% to $393 million
from $298 million in the pcp.
The bank cut its impairment losses to $38 million in the
period under review compared with $73 million in March last
Australian-owned banks are using cash earnings - a measure
closely watched by analysts because it disregards certain
income and expenses - as their measure of performance.
The National Australia Bank-owned BNZ increased its cash
earnings by $13 million to $400 million - a 3.4% increase on
the pcp and a rise more restrained than the overall balance
Interest income in the period increased 3.1% to $802 million
and tax paid increased by 34% to $154 million from $109
million in the pcp.
The bank employs 5000 people.
Outgoing chief executive Andrew Thorburn, who takes over soon
as the head of NAB, said the result, in a highly regulated
and competitive environment, reflected a focus on execution,
innovation and strengthening the bank's balance sheet.
''Over the past three years, BNZ has been pursuing a strategy
of growing customer deposits and reducing reliance on
wholesale funding, particularly short-term wholesale
"The success of this strategy has resulted in a funding mix
that supports sustainable balance sheet growth.''
Customer deposits continued to grow, increasing by $4.6
billion, or 12.4%, compared with the pcp. The bank increased
its market share to 19% from the same period last year.
The bank's core funding ratio was 85% at balance date,
''comfortably'' exceeding the Reserve Bank's minimum
requirement of 75%, he said.
Average lending volumes increased by $3.1 billion, or 5.2%,
to $62.5 billion, compared with the pcp.
The increase was driven by a strong business lending
portfolio experiencing steady growth in institutional banking
Housing growth was influenced by the Reserve Bank's high
loan-to-value ratio lending limits which came into effect
last year, and intense market competition.
However, housing volume had grown by $400 million over the
half in targeted sectors, Mr Thorburn said.
Net interest margins fell 0.6% to 2.34% compared with the
pcp, but increased by 0.1% compared with the six months ended
The change was largely driven by customers' preference for
lower-margin fixed-rate lending in a rising interest rate
environment. The decrease in margin was partially offset by
reducing funding costs, he said.
Reflecting on his time as chief executive of BNZ, Mr Thorburn
said he was proud of the way the bank stayed true to the
ethos of helping New Zealanders be good with money and
supporting New Zealand businesses to grow, all within a
fast-changing, highly competitive environment.
In Australia, NAB increased its first-half profit by nearly
16% as bad debt charges fell and the lender's United Kingdom
operations continued to recover.