BNZ first-half cash earnings up 36% on wider margins

BNZ reports a 36% jump in first-half profit after widening its interest margin, lifting deposits and taking a lower charge for bad debts.

BUSIESSDESK: Bank of New Zealand, the local unit of National Australia Bank, reported a 36% jump in first-half profit after widening its interest margin, lifting deposits and taking a lower charge for bad debts.

Cash earnings were $385 million in the six months ended March 31, from $283M a year earlier, the lender said today.

Parent National Australia posted a 6% gain in first-half cash earnings to $A2.8 billion, while net profit fell about 16% to $A2 billion, reflecting charges in its UK business.

BNZ, the nation’s second-largest by total assets after ANZ National Bank, said earnings growth was achieved on “modest margin improvement, increased volumes and a lower charge for bad and doubtful debts”.

The net interest margin widened by 17 basis points to 2.41%, which it said reflected strong growth in demand for variable rate mortgages and a favourable product mix.

Retail deposits climbed by 10.2% to $33.5 billion and the bank lifted its market share by 70 basis points to 18.7%.

BNZ’s charge for bad and doubtful debts fell 64% to $34M, reflecting lower provisions on business loans, “strong” credit card collections and an overall improvement in credit quality “as the economic recovery continues”.

BNZ’s Tier One capital ratio was 9.59%.

The parent’s earnings were dented by the continued poor performance of its British banking business, where it is overhauling its operations and plans to eliminate 1400 jobs.

Its charge for bad and doubtful debts rose by 36%, with most of that reflecting “the significant deterioration in asset quality”.

Shares of National Australia last traded on the ASX at $A24.61 and have climbed 5.4% this year.

The company is rated "outperform" based on the consensus of 19 analyst recommendations compiled by Reuters.
 

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