Bank of New Zealand has made more room in its coffers for bad debts as risk in the business sector remains high – full-year results reveal.
Accounts for the year to September 30 show BNZ lifted cash earnings by 1.4% to $524 million from the same time last year.
Provision for bad debt was increased 12.5% to $99 million over the last six months – reflecting the “downside risk that remains in the business sector”, the bank said in a statement.
This compares to the more than 40% reduction in the group-wide provision for bad debt made by its parent National Australia Bank (NAB).
NAB, Australia’s largest business lender, credited lower bad debt charges for the 63% rise in net profit to $A 4.22 billion, up 63.2 per cent on the same time last year.
Cash earnings of $A4.58 billion rose $A74 million or 19.3%.
BNZ chief executive Andrew Thorburn said the New Zealand division had made a solid and consistent performance in a challenging year for business.
“The recovery of New Zealand’s economy has been slower than anticipated as it has undergone significant rebalancing in the last year. Deleveraging by businesses has also reduced the demand for credit as businesses delay investment decisions. As a result, overall lending volume growth has been modest,” Mr Thorburn said in a statement.
Customer deposits grew 9.7% to $2.5 billion in the year from retail and business customers – boosting BNZ’s share of the deposit market to 17.6% from 17%.
The decision to abolish honour and dishonour fees from September last year had reduced revenue by $23 million.
Mr Thorburn said the bank would later this year gauge investor interest in an international covered bond issue, following successful domestic covered bond issue of $425 million in June.
“Development of covered bonds in New Zealand is an important new market to create longer term funding sources and reduce reliance on short-term international wholesale funding.
BNZ supports the Reserve Bank consultation on the introduction of a legislative framework for New Zealand issued covered bonds.”
The banks $195 million investment in its retail and business centre network had gained momentum, with 26 store upgrades now complete and ten new BNZ Partners Business Centres now open, with 20 more in line for completion by the end of next year.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Massey University's David Tripe on why CBA is selling its life businesses at a loss
- As much as the leaders will bask in a win, they will both face challenges as prime minister, comments Rob Hosking
- Fisheries Inshore NZ chief executive Jeremy Helson says many in the industry have concerns about new fishing regulations
- Perry Group chairman Simon Perry explains why Hamilton needs a $1 billion development in a disused quarry
- Jacinda Ardern has sure been talked up a lot by the media, claims David Cohen
- NBR Radio: best of the week ended September 15, with Grant Walker