BNZ profit jumps 28 per cent on stronger margins

BNZ chief executive Anthony Healy is very pleased with the bank's half-billion dollar haul.
CHRIS SKELTON/FAIRFAX NZ

BNZ chief executive Anthony Healy is very pleased with the bank's half-billion dollar haul.

Higher profit margins helped the Bank of New Zealand's half-year profit leap 28 per cent, which the bank's boss says is "extremely pleasing".

The Australian-owned bank posted a net profit of $502 million for the six months to March 31.

The strong result was attributed to increased income, partly offset by higher expenses and charges for bad debts.

BNZ chief executive Anthony Healy said the result was "extremely pleasing" and a reflection of the growth momentum the bank was building.

However, much of the result was driven by a major swing in the valuations of various finance-related contracts, with movements previously described as "accounting noise".

The bank's net interest margin, which represents the premium added to loans, also increased from 2.34 per cent to 2.41 per cent as funding costs fell.

That was offset slightly by customers continuing to switch to less-profitable fixed mortgages.

Expenses increased by 2 per cent due to an increase in staffing costs, while provisions for bad and doubtful debts increased from $41m to $46m.

BNZ's market share of Housing mortgages was stable at 15.8 per cent, but Healy said he expected it to grow following the bank's recent re-entry to the mortgage broker market.

"We know that 25 per cent of customers choose to use a broker, so our decision made strategic and commercial sense," he said.

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The bank's agribusiness market share was also flat.

Dairy farmers are struggling with milk prices back to five-year lows, and a major drop in the forecast return for the current season.

Healy said nearly 2000 farmers had attended one of the bank's resilience workshops.

"Despite the drought in some parts of New Zealand and volatile milk powder prices, I am confident the industry is robust and will continue to take advantage of the huge demand from Asian consumers for high-quality, safe foodstuffs," he said.

On Tuesday ANZ reported a net profit of $877m, its fifth record interim profit in a row, while Westpac reported a $441m profit on Monday. ASB follows a different financial year.

BNZ's parent company, National Australia Bank, reported a half-year net profit of A$3.44 billion ($3.66 billion), up 20.4 per cent.

That was overshadowed by the announcement that bank is planning a A$5.5b capital raising, which would be the biggest in Australian history.

 - Stuff

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