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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 period.
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 year.
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 sheet showed.
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 borrowings.
"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 and agribusiness.
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 September 20.
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.