BNZ results on the turn as economy improves

Thursday 6th May 2010

Bank of New Zealand is reporting a turnaround in earnings that mirrors the track of the New Zealand economic recession, with a half-year net profit to March 31 of $255 million - an improvement of 7.1% on the previous six months to September 30, but still 8.6% below the $279 million reported for the half-year to March 31 2009.

That trend typified the figures released this morning by BNZ, the local subsidiary of National Australia Bank. NAB reported a 21.4% drop in earnings to the ASX this morning, mainly owing to the impact of fair value valuations on financial instruments.

Net profit fell to A$2.1 billion for the six months to March 31 from A$2.664 billion in the prior corresponding period, although the result was a bounce back from the A$75 million loss recorded in the second half of the last financial year.

BNZ chief executive Andrew Thorburn said the local result "indicates that the worst of the recession is behind us."

"Looking forward, growth is improving, although subdued business and household credit demand, along with higher funding costs, will continue to be key factors," Thorburn said.

The bank performed well in the competitive deposit-taking market, increasing its market share to 17.5%, compared to 16.1% a year earlier, with total retail deposits standing at $27.7 billion ($25.4 billion in the prior corresponding period).

Net interest margin at 2.08% was an improvement on the 1.96% recorded in the six months to September, but still below the 2.16% achieved a year earlier.

At 44.8%, the bank's cost to income ratio also remained well above last March's 41.8%, although improved on the 46.5% seen in the weak second half of the last financial year.

Net operating income for the period was $814 million ($849 million).

Thorburn said average bank lending over the half was up 4% on the previous corresponding period, and that BNZ had maintained market share in business lending, despite that part of the market shrinking during the year.

Housing market share at 15.8% was slightly improved, while agri-business market share of 19% was up from 18.2% a year earlier.

Doubtful debt provisioning of $88 million for the half was down $11 million on March 2009, and in line with the September half provisioning.

"The growth rate of impaired assets during 2009 has declined and is stabilising," Thorburn said.

Businesswire.co.nz

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