Bank of NZ first-half cash earnings rise 4.5% as lending growth drives interest income

Thursday 7th May 2015

Bank of New Zealand, the local unit of National Australia Bank, posted a 4.5 percent gain in cash earnings as growth in housing and business lending, and lower funding costs, drove up net interest income.

Cash earnings from New Zealand banking operations rose to $418 million in the six months ended March 31, from $400 million a year earlier, the lender said in a statement. Net interest income climbed 7.8 percent to $804 million. Net profit, which includes fair value accounting adjustments and other items, rose 28 percent to $502 million.

The lender's parent reported a first half cash profit gain of 5.4 percent to A$3.32 billion, although the operating results were overshadowed by its announcement of an A$5.5 billion rights issue, allowing National Australia Bank to demerge up to 80 percent of its Clydesdale Bank unit in the UK, selling the remainder to institutions in an initial public offering. The bank will put up 1.7 billion pounds to cover potential losses from legacy costs as it exits its troubled UK operations.

In New Zealand, average lending volumes rose by 4 percent in the first half, driven by a 4.7 percent increase in housing volumes and a 3.5 percent gain in business lending. BNZ's share of housing and business lending was largely stable, it said. Total interest earning assets rose by 4.5 percent to $67 billion. Customer deposits grew by 7.4 percent to $44.8 billion.

The bank's charge for bad and doubtful debts rose to $46 million from $41 million. Operating expenses increased to $407 million from $400 million.

BNZ's net interest margin widened by 7 basis points to 2.41 percent.

National Australia's shares last traded at A$35.20 and have edged up 3.2 percent in the past 12 months, about matching the gain in the benchmark S&P/ASX 200 Index.

BusinessDesk.co.nz

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