BNZ's profit broadly flat in first quarter
GEORGE LIONDIS AND RICHARD MEADOWS
Bank of New Zealand's profit have been broadly flat over the first quarter of the new financial year, according to a trading update posted by its Australian parent, NAB.
Growth in business lending and stable margins were largely offset by higher expenses in the three months to December 31, the bank said.
Bad and doubtful debt charges were flat, while indicators of asset quality improved.
In October last year the BNZ reported a full-year profit of $695 million, up 20 per cent.
While no specific numbers were given for the BNZ, the NAB group as a whole turned in a A$1.55 billion (NZ$1.7b) first-quarter profit, up 7 per cent.
Lower bad debts and growth in mortgages offset higher costs and a decline in business lending.
"The group achieved a solid first-quarter result, with a continuation of the trends evident in the second-half 2013 result, including further improvement in asset quality and good growth in mortgages," NAB chief Cameron Clyne said in a statement.
As record low interest rates fire up the property market, Clyne said NAB had increased its share of the home-loan market over the quarter.
Despite gains in home loans, NAB's lending to business was "slightly lower" over the quarter amid stiff competition from rivals and slack demand from customers.
With the British economy pulling out of recession, Clyne said the improved performance of NAB's Clydesdale and Yorkshire banks in Britain was "particularly pleasing" as bad debts from the country declined.
However, the NAB warned that it was facing the prospect of higher claims from disgruntled customers in Britain.
Amid widespread claims of mis-selling of financial products by customers of all banks in the Britain, NAB said its "redress costs" were negligible in the quarter, but that there had been an increase in complaints.
NAB's British business has proved a source of major problems for the group in the past as Britain's weak economy triggered an increase in bad debts.