BNZ first-half earnings rise 3.4 percent as charges on bad debts decline, business lending grows

Thursday 8th May 2014

Bank of New Zealand, the local unit of National Australia Bank, lifted first-half cash earnings 3.4 percent as it faced smaller charges on bad debt, while business lending underpinned a small gain in interest income.

BNZ's cash earnings rose to $400 million in the six months ended March 31 from $387 million a year earlier, Australian parent NAB said in a statement. Impairment charges dropped 27 percent to $41 million, bolstering gains from a 1.4 percent increase in underlying profit to $594 million. The bank shrank expenses 1.3 percent in the half, and reduced staff numbers 3.1 percent to 4,719 full-time equivalents.

Statutory net profit, which includes movements in the value of financial instruments and incorporates wholesale operations reported in NAB's Australian banking unit, rose to $393 million from $298 million.

The lender lifted net operating income 1.3 percent to $994 million, led by increased business lending volumes, which offset muted home loan borrowing after Reserve Bank-imposed restrictions on low-equity mortgages stifled demand.

"Good growth in business lending, tight management of costs and lower loan losses were the main contributors," NAB said in its commentary. "Asset quality indicators improved over the period."

The New Zealand unit contributed about 12 percent to Melbourne-based NAB's group cash earnings of A$3.15 billion in the half, up from A$2.9 billion a year earlier. Australia's third-biggest mortgage lender increased first-half operating income 2.6 percent to A$9.49 billion, even as net interest margins shrank 9 basis points to 1.94 percent.

BNZ increased gross loans 5.2 percent to $62.5 billion as at March 31 from a year earlier. It lost market share in housing lending, with 15.8 percent from 16 percent six months earlier, citing increased competition. The lender's share of agribusiness lending edged up to 22.2 percent while business lending was 22.2 percent. Net interest margins shrank 6 basis points to 2.34 percent.

The bank had customer deposits of $41.7 billion as at March 31 from $37.1 billion a year earlier, claiming 19 percent of market share for retail deposits.

NAB declared an interim dividend of 99 Australian cents per share, up from 93 cents a year earlier.

The ASX-listed shares fell 0.8 percent to A$33.84 yesterday, and have decreased 2.8 percent this year.

BusinessDesk.co.nz

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