3 Nov 2011

Profits rise sharply at New Zealand's largest lender

12:33 pm on 3 November 2011

ANZ New Zealand is the latest bank to experience a jump in profit, boosted by a drop in bad debts.

The Australian-owned bank made $1.1 billion in the year to September, an increase of 25% compared with the previous year. It is New Zealand's largest lender.

ANZ says the improved result is mainly due to a fall in the amount of money set aside to cover potentially bad debts, which fell by more than half to $187 million.

Income rose 7% to $3.2 billion, due to more people moving from fixed to higher-margin floating mortgage rates, though growth slowed in the second half of the year.

But lending volumes edged down 2% to $89 million led by its commercial arm, the third successive year of modest declines.

Deposits rose 4% to $50 billion, though margins fell as it battled its rivals to attract savers.

The bank also took a one-off charge of $111 million from moving to a single core banking computer system to cover its ANZ and National retail arms.

Overall, the ANZ Group's profit rose by 19% to $A5.3 billion because of a drop in bad debts.

On Wednesday, Westpac reported its annual cash earnings had risen by 41% to $454 million.

BNZ said last week its full year cash earnings rose by 19% to $612 million.