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Business > News & Opinions > NZPA > Article

NZPA

BNZ posts healthy half-year profit

Friday May 9, 2008, 10:44 am

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National Australia Bank unit, Bank of New Zealand, today reported its March half year net profit increased 14.9 percent to $239 million.

The underlying profit rose 9 percent to $324m.

BNZ chief executive Cameron Clyne said the result was the result of strong income performance, and holding costs stable -- for the sixth consecutive half year.

The bank's cost to income ratio fell from 50.7 percent a year earlier to 47.8 percent.

Mr Clyne said the profit rise came against a backdrop of a fragile economy and a significant rise in credit spreads paid by banks for wholesale funding.

He said the environment had led to slowing growth in assets volumes and stronger competition for deposits.

Net interest income grew by 11.6 percent, reflecting solid volume growth combined with "disciplined" margin management.

Average lending volumes increased by 11 percent as retail deposits jumped by 8 percent.

The bank's interest margin fell 2 basis points to 2.49 percent although it increased nine basis points from the September half year.

Mr Clyne said margins were under pressure due to an increased proportion of wholesale funding, which had becoming more expensive due to the international credit squeeze.

The bank's other operating income fell by 10.5 percent to $179m, mainly because last year there was a one-off $10m gain from the sale of MasterCard shares.

The charge for doubtful debts rose $3m as defaulting of loans increased. However, Mr Clyne noted this was from historically low levels.

The ratio of gross impaired assets remained steady at 0.1 percent of gross assets. The level of write-offs remained stable, he said.

BNZ raised $450m in March 2008 through the issue of perpetual shares. The bank said the issue had been well received as investors fled finance companies in the wake of so many company collapses.

Earlier, NAB, Australia's top lender by assets, announced an 8 percent in first-half profit, helped by business lending growth and cost cuts.

Cash earnings rose to $A2.237 billion ($NZ2.76b) for the six months to March from $A2.071b a year ago, and against analysts' forecasts around $A2.212b.

NAB increased its charge for bad and doubtful debts by 86 percent to $A726m, joining its Australian rivals in increasing provisions amid the global credit crunch.

Source: NZPA

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