BNZ 1Q profit sinks 56% on impairments, loan growth drives underlying earnings
Bank of New Zealand first-quarter profit sank 56 percent after the local unit of National Australia Bank took bigger impairment charges on its loan book and wrote down the value of financial instruments. Loan growth bolstered underlying earnings.
Net profit fell to $126 million in the three months ended December 31 from $289 million a year earlier, according to the lender's general disclosure statement. Net interest income rose 7.8 percent to $388 million, with net margins rising to 40.5 percent from 38.5 percent a year earlier.
Earlier this month, NAB said the New Zealand banking unit's cash earnings were up on volume growth and higher fee income.
BNZ treasurer Tim Main declined to give a cash earnings figure, but indicated the net interest income growth was a good indicator of how the bank tracked in the quarter.
"We're seeing things start to improve in lending volumes, reflecting confidence in the economy with a solid increase in credit growth in households and the business sectors," he told BusinessDesk.
BNZ lifted its home loans to $28.49 billion as at December 31 from $28.13 billion three months earlier and net loans grew to $59.78 billion from $58.92 billion.
Mr Main says loans grew at an annualised pace of 6 percent in the December quarter, compared to 3 percent or 4 percent a year earlier.
BNZ's bottom line was hit by a $74 million loss on the fair value of its financial instruments, compared to a $139 million gain a year earlier, and a $36 million impairment charge on its credit exposures, up from a $3 million charge in 2011.
The lender's term deposits slipped to $22.13 billion as at December 31 from $22.36 billion at the end of September.
Mr Main says banks are meeting their funding requirements through their deposit bases, though he is not seeing the "aggressive price competition" that occurred after the global financial crisis.