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BNZ half-year cash earnings up 11%

Thursday 5th May 2011

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Bank of New Zealand contributed cash earnings of NZ$283 million to parent National Australia Bank's A$2.7 billion (NZ$3.65 billion) half-year profit released today.

The New Zealand result was an 11% increase on a year earlier, while the parent increased its profit by 21.7% and its United Kingdom business notched up 26.2% growth.

NAB, which is run by former BNZ boss Cameron Clyne, described the New Zealand economy as subdued and it booked a NZ$60m provision for the earthquakes in Christchurch.

The cash earnings of NAB's wholesale division dropped 2.5% due to lower revenue from the markets divisions, particularly in New Zealand.

But the bank said the margins in its New Zealand banking business are improving due to "repricing for current market conditions" and increased demand for variable rate housing mortgages.

The bank's net interest margin in New Zealand was 2.24%, unchanged from the previous six months and compared to 2.08% in the same period a year ago.

The parent said its New Zealand banking business grew its market share in retail deposits, and in both housing and agri-business lending.

Net interest earnings for the six months to March 31 were up 7.6% from the year before to $640 million, although only $2 million up from the September half year.

BNZ chief executive Andrew Thorburn said the result was built on good revenue and deposit growth, prudent cost management, and the bank's ability to bring innovative new products and services to the local market.

Retail deposits were up 9.7% from a year earlier, and 5.6% from the preceding half year, to $30.4 billion. Market share was up to 18.1% from 17.5% a year earlier.

The rise in customer deposits, along with diversifying and lengthening the bank's wholesale term funding profile with its pioneering issuance of covered bonds had strengthened the fundamentals of the bank, Thorburn said today.

Lending growth remained modest due to the subdued housing market and as many businesses remained focused on deleveraging rather than expansion.



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