Bank of New Zealand FY cash earnings climb 21 percent

Wednesday 31st October 2012

Bank of New Zealand, the local unit of National Australia Bank, posted a 21 percent gain in cash earnings, saying its net interest margin widened on demand for variable rate mortgages.

Cash earnings rose to $741 million in the 12 months ended Sept. 30, from $612 million a year earlier, Net operating income climbed 6 percent to $1.88 billion.

New Zealand marked a bright spot for National Australia Bank, as the group's total cash earnings fell 0.5 percent to A$5.4 billion and net profit dropped about 22 percent to A$4.1 billion, reflecting higher charges for bad debts in the UK and a general provisioning pretax charge of A$250 million.

Revenue for the group rose 3.6 percent in a year when the lender focussed on maintaining balance sheet strength, with A$31.3 billion of term wholesale funding secured during the year.

For New Zealand's third-biggest bank by net assets, the latest year saw the net interest margin widen by 9 basis points to 2.39 percent. The cost-to-income ratio fell by 150 basis points to 40.6 percent. Total assets rose to $59.7 billion from $58.1 billion. Its Tier 1 capital ratio was 11.26 percent.

"Continuing to strengthen our balance sheet is imperative in the face of lingering global uncertainties," said BNZ chief executive Andrew Thorburn. "While we're seeing signs of stabilisation domestically, the operating environment remains challenging with volatility in Europe and uncertainty around the timing of the Christchurch rebuild, as well as growth concerns in China and Australia."

The provision for bad and doubtful debts fell by $53 million or 35 percent to $98 million, which it said partly reflected customers benefiting from historically low interest rates.

The lenders aid its share of rural banking rose to 21.9 percent from 20.8 percent and its share of retail deposits climbed to 18.8 percent from 18 percent. Cash earnings were 7.5 percent lower in the second half than the first six months, when the bank recorded a low provision for bad and doubtful debts.

BusinessDesk.co.nz

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