9 May 2013

BNZ half-year result up 31%

7:17 pm on 9 May 2013

The Bank of New Zealand lifted first-half net profit nearly 31%, largely due to smaller unrealised losses on financial instruments. Net profit for the six months ended March was $298 million.

Radio New Zealand's business editor reports cash earnings at BNZ, which is owned by National Australia Bank, rose 8.7%.

Managing director Andrew Thorburn attributed the outcome to continued investment in the business.

The bank highlighted the growth in its customer deposits which were up by nearly 11%, $3.6 billion, compared with the same six months a year earlier.

Mr Thorburn said actively growing BNZ's deposit base, diversifying its presence in wholesale funding markets and holding prudent levels of cash and other liquid assets contributed to maintaining its rock-solid balance sheet and maintaining its AA- credit rating.

He said BNZ's average lending volumes rose 3.3%, $1.9 billion, and that lending grew particularly to agriculture.

Mr Thorburn said the bank's deposits have been growing at a significantly faster rate than its lending.

"For us in the half, we've grown our deposits 4.8%, so that's good, we've grown at 10% over the year, but in this last half our lending's gone up 1.8%, so that's probably the ratio that we're more comfortable with and that we're more familiar with in recent times."

The improving economy and current low interest rates helped cut the charge to provide for bad debts by 12.5% in the latest six months.

BNZ said that came from reductions across the business, agricultural and retail sectors.

Parent company National Australia Bank reported a first half profit of $A2.92 billion, up 23% from the previous first half.

AAP reports the NAB's result takes the combined cash profits made by the big four banks in the first six months of their fiscal years to $A13.4 billion.