Bank of New Zealand profits climb to more than $1.5 billion

BNZ profits climbed to $1.51 billion in the year to September, compared to $1.41b for the same period last year.
BNZ profits climbed to $1.51 billion in the year to September, compared to $1.41b for the same period last year. Photo credit: RNZ

Story by RNZ

The Bank of New Zealand has defied a slowing economy and demand for credit to post a record annual profit.

Key numbers for the year ended September compared to the previous year:

  • Net profit $1.51b vs $1.41b
  • Cash profit $1.52b vs $1.39b (excludes one-offs)
  • Revenue $3.5b vs $3.13b
  • Net interest margin 2.40 pct vs 2.15 pct
  • Impairments $172m vs $89m

BNZ chief executive Dan Huggins said the result reflected contrasting performance between the first and second halves of the year.

"The result reflects a strong first half, with a decline in net profit of 12.5 percent in the second half reflecting the broader economic slowdown in New Zealand."

Revenue growth was driven by a near 16 percent rise in net interest income - the difference between what the bank borrows at and what it charges - and its interest margins rose to 2.4 percent from 2.15 percent.

Huggins said there was a more cautious approach to borrowing by consumers and businesses with lending rising 2.5 percent increase, below last year's growth, while deposits rose 3.6 percent.

The BNZ's operating expenses were up nearly 14 percent as it invested more in systems particularly to combat fraud and scams.

But in a sign of the times it nearly doubled the amount set aside for bad and doubtful debts to $172m from $89m a year ago.

"Despite the slowing economy and intense competition across the banking sector, we've continued to see growth across the business as more New Zealanders choose to bank with BNZ."

He said the BNZ had gained nearly 5000 home loan customers from other lenders during the year, but at the same time had given more than $50m interest rate relief to customers.

"While most of our home lending customers have moved onto higher rates, we continue to proactively contact those who we have identified as potentially needing additional support."

Huggins expected a flat economy for the coming year, but forecast a gradual recovery in confidence and activity.

"New Zealanders are resilient, and while the year ahead will remain challenging, we are optimistic about New Zealand's future potential and prosperity."