BNZ Bank has lifted its full year profit by 21%, due to higher income and fewer bad debts. Cash earnings were $741 million in the year to September.
Last week, ANZ lifted its underlying profit by 10% to $1.4 billion, bolstered by a gradually improving economy. That trend has also helped the BNZ, whose income rose 6% to $1.9 billion.
Its net interest margin rose 9 basis points to 2.39% due to customers switching from fixed to more lucrative floating mortgage rates.
The subdued recovery has also led to a decline in the amount set aside to cover potential bad loans, which fell by 35% to $98 million, while overdue loan repayments fell as a proportion of its total loan book.
Lending increased 4% to $58 billion, due to an increase in business loans, while deposits rose 11% to $34.5 billion.
BNZ also lifted its share of the retail deposit market to 19% and farm lending to 22%, while its share of housing remained flat at 16%.
BNZ's parent, National Australia Bank, experienced a fall in its full year cash profit to $A5.4 billion, due to its struggling UK operations and cooling Australian economy.
BNZ chief executive Andrew Thorburn says that the slow but steady improvement in the economy has helped lift earnings, though uncertainty is curbing lending growth.