Photo: RNZ / Nate McKinnon
The Bank of New Zealand has sustained near record profits with increased lending and deposits, despite a slowing economy and lower margins.
Key numbers for the year ended September compared to the previous year:
- Net profit $1.506b vs $1.509b
- Cash profit $1.44b vs $1.51b (excludes one-offs)
- Revenue $3.62b vs $3.50b
- Expenses $1.39b vs $1.22b
- Net interest margin 2.37 pct vs 2.40 pct
- Impairments $146m vs $172m
BNZ chief executive Dan Huggins said the result was solid given challenging conditions which had put households and businesses under pressure.
"We've been growing our total assets by about 4 percent so that's seen our profit hold flat, but good underlying growth in our balance sheet as more customers have turned to bank with the BNZ."
Lending and deposit growth was about 4 percent, but net interest income -- the difference between what the bank borrows at and what it charges -- was fractionally higher, while its interest margins dipped to 2.37 percent from 2.4 percent.
The result was also boosted by a gain of about $100 million from the sale of its wealth management business.
Huggins said the BNZ had been increasing its market share and was the biggest big bank lender to the business and rural sectors.
"We have backed our business customers through the economic cycle with an understanding that while times are tough now, there will be opportunities for growth ahead."
The BNZ's operating expenses were up nearly 14 percent as it invested more in systems to combat scams, and allow open banking through third party finance groups.
The BNZ reduced the amount set aside for bad and doubtful debts to $157m from $172m a year ago, which was above levels reported by other major banks, but which Huggins labelled as prudent.
Turning the corner
Huggins said the economy was turning the corner and at the start of recovery, but headwinds would continue next year.
"It's good to see some relief through lower interest rates, but the environment is still subdued... it's still tough and we'll need to work with customers over the next six to 12 months as we come through and the economic cycle turns."
Huggins said the BNZ has also embraced open banking, which allows third party finance companies to link to the BNZ's systems to offer various financial services and products.
It has just acquired BlinkPay, a payment services company, and was also backing a new point of sale payments service.
"We've been a leader in the open-banking space ... and we see that continuing to develop to make it simpler and easier for Kiwis to do their banking."
Huggins said the BNZ was getting on with delivering on the recommendations in the recent Commerce Commission banking market study, but he would tell the current parliamentary inquiry into banking that the sector was competitive.
"It's important we are held accountable and that the questions the committee has are put to us and ensuring Kiwis have confidence in the sector."
