With half-year cash earnings rising 7.1 % on the previous six months, Bank of New Zealand is the third major bank in this country to indicate the worst of the recession is behind them.Bank of New Zealand this morning revealed half-year cash earnings of $2
With half-year cash earnings rising 7.1 % on the previous six months, Bank of New Zealand is the third major bank in this country to indicate the worst of the recession is behind them.
Bank of New Zealand this morning revealed half-year cash earnings of $255 million from its core local banking operations in the six months to March 31.
That’s an improvement of 7% on the previous six months to September, but when compared to the same time last year, represents a fall of 8.6%.
Provision for bad debts had improved. At $88 million, that was in line with the previous half but $11 million less than the same time last year.
BNZ chief executive Andrew Thorburn said the result was a good performance post-recession.
Headline profit for the total BNZ group, which includes New Zealand banking and the wholesale business, remained stable at $415 million, 3.8% higher than the same time last year.
Mr Thorburn said BNZ has bolstered its balance sheet position with higher capital ratios, liquidity levels and an increase in domestic funding.
While growth was improving, Mr Thorburn said subdued demand for business and household credit demand, along with higher funding costs, would continue to be key factors to watch.
The bank’s total capital ratio, at 12.03%, is well above the minimum 8% required by the Reserve Bank.
In an “intensely competitive” market for customer deposits, BNZ achieved a 9.1% increase in average volumes over the last year, while deposit rates have risen significantly. Retail deposit market share increased to 17.5% from 16.1% in March 2009.
Mature wholesale funding that is being replaced at higher market rates was also driving up total funding costs, said Mr Thorburn.
“All of our wholesale funding raised in the six months to March 31 was completed without the use of the Government Guarantee, which shows strong investor confidence in BNZ.”
BNZ is the third bank to report half-year results in the last fortnight, with similar patterns.
Westpac yesterday revealed cash earnings of $125 million in its New Zealand business for the six months to March – down 38% from the year earlier but almost four times earnings for the six months to September.
Last week ANZ revealed an underlying profit of $372 million for the period, down 25% on the same time last year but almost triple the amount it made in the prior six months.
