BNZ cash earnings climb 21% as mortgage demand widens margins

Chief executive Andrew Thorburn

BUSINESSDESK: Bank of New Zealand, the local unit of National Australia Bank, posted a 21% gain in cash earnings, saying its net interest margin widened on demand for variable rate mortgages.

Cash earnings rose to $741 million in the 12 months ended September 30, from $612 million a year earlier. Net operating income climbed 6% to $1.88 billion.

New Zealand marked a bright spot for NAB, as the group's total cash earnings fell 0.5% to $A5.4 billion and net profit dropped about 22% to $A4.1 billion, reflecting higher charges for bad debts in the UK and a general provisioning pretax charge of $A250 million.

Revenue for the group rose 3.6% in a year when the lender focussed on maintaining balance sheet strength, with $A31.3 billion of term wholesale funding secured during the year.

For New Zealand's third-biggest bank by net assets, the latest year saw the net interest margin widen by 9 basis points to 2.39%. The cost-to-income ratio fell by 150 basis points to 40.6%. Total assets rose to $59.7 billion from $58.1 billion. Its Tier 1 capital ratio was 11.26%.

"Continuing to strengthen our balance sheet is imperative in the face of lingering global uncertainties," BNZ chief executive Andrew Thorburn says.

"While we're seeing signs of stabilisation domestically, the operating environment remains challenging, with volatility in Europe and uncertainty around the timing of the Christchurch rebuild, as well as growth concerns in China and Australia."

The provision for bad and doubtful debts fell by $53 million or 35 percent to $98 million, which it said partly reflected customers benefiting from historically low interest rates.

The lenders aid its share of rural banking rose to 21.9% from 20.8% and its share of retail deposits climbed to 18.8% from 18%.

Cash earnings were 7.5% lower in the second half than the first six months, when the bank recorded a low provision for bad and doubtful debts.

This article is tagged with the following keywords. Find out more about My Tags

Comment & Question

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7878 -0.0004 -0.05%
AUD 0.9091 0.0005 0.06%
EUR 0.6356 -0.0003 -0.05%
GBP 0.5032 0.0001 0.02%
HKD 6.1123 -0.0013 -0.02%
JPY 92.8410 0.0020 0.00%

Commods

Commodity Price Change Time
Gold Index 1201.1 7.690 2014-11-21T00:
Oil Brent 78.6 -0.120 2014-11-21T00:
Oil Nymex 76.5 0.710 2014-11-21T00:
Silver Index 16.4 0.260 2014-11-21T00:

Indices

Symbol Open High Last %
NZX 50 5526.9 5526.9 5526.9 -0.56%
NASDAQ 4751.0 4751.6 4701.9 0.24%
DAX 9521.2 9736.1 9484.0 2.62%
DJI 17721.0 17894.8 17719.0 0.51%
FTSE 6678.9 6773.1 6678.9 1.08%
HKSE 23353.7 23508.0 23349.6 0.37%
NI225 17285.7 17381.6 17300.9 0.33%