11 May 2006
Bank of New Zealand reports solid underlying performance
Bank of New Zealand today announced a $270 million profit for the half-year ending 31 March 2006. The Bank’s managing director, Peter Thodey, said that the profit result was $19 million (7.6%) higher than the previous year*. It was particularly pleasing in light of challenging market conditions arising from intense competition and a slowing economy.
“The past few years has seen the consistent application of our strategy along with alignment of our products and services, which finds Bank of New Zealand well positioned to face the challenges ahead,” said Mr Thodey. “We have a strong and focussed business strategy which is working for us.”
Net interest income increased 9.6% to $524 million, compared to the same period last year. This was an outstanding result, said Mr Thodey. “Sound margin management is a big part of our continued success. Not only have we offered the best products and competitive rates to our customers, we have restricted our margin decline to eight basis points when most of our competitors have experienced much larger contractions.”
Bank of New Zealand is New Zealand’s second largest bank and has held its share of key markets during the period. “While we are known throughout the market as highly competitive, we are not out to win business at any cost. Our approach has always been to ensure that our customers can comfortably meet their obligations. As a result, our credit quality remains excellent, above industry standards, in fact.”
Bank of New Zealand’s success is attributed to the breadth and depth of its business which has its strengths in business and corporate banking. “This has enabled us to move to replicate that success in the personal markets,” Mr Thodey said.
“Our new advertising campaign, which has already achieved exceptionally high awareness levels, reflects the confidence of the Bank as a whole. We are looking to stretch our brand beyond its traditional strongholds and show people from all walks of life and sectors how they can be better off by banking with Bank of New Zealand.”
Early reports show that the Bank’s new approach to advertising is having the desired effect. “We’re buoyed by initial feedback and are looking forward to customers’ reactions as we roll-out further television commercials in the series.”
For personal customers, the Bank recently released a comprehensive package of innovative online services, including text and email alerts to make mobile banking easier and more convenient, and enhanced security for personal internet banking users through second factor authentication.
A reinvigorated focus on attracting new customers has seen a first for the New Zealand banking market, a team dedicated to switching customers’ transactional banking accounts.
“Our new switching service, launching later this month, will take away all the hassle for customers who wish to move their accounts to Bank of New Zealand,” said Mr Thodey. “We believe that this service, when combined with our Unbeatable mortgage rates and other products will have broad appeal. Customers who participated in the switching pilot were thrilled with the new, free service and pleased that they didn’t have to do all that work themselves.”
Business customers are finding increasing favour with Bank of New Zealand’s debtor finance service, a new form of working capital finance that the Bank has provided for the past few years, said Mr Thodey.
“We’ve seen very pleasing growth in this part of our business, and customers are responding well. Debtor finance is particularly suited to growing businesses, as it enables more effective management of working capital, and provides more funds than a traditional overdraft. As the only major bank in New Zealand providing this sort of finance we are proud to be able to offer this innovative service to our business customers.”
Bank of New Zealand's overall ACNielsen customer satisfaction result for the March quarter has risen from 65% to 66% - the highest result for the Bank since 1997.
On the community front, the past six months has been particularly busy with the Bank’s involvement as principal partner to New Zealand’s Commonwealth Games Team, and the announcement of a new sponsorship supporting the University of Auckland’s Chair of Banking Studies, aimed at supporting a step-change in financial literacy among New Zealanders.
“The Bank’s ‘adopt an athlete’ programme saw more than $160,000 raised by our staff within their communities for games athletes, many of whom had funded their preparation from their own pockets. We know from the athletes’ feedback that they were overwhelmingly grateful for our support and that it made a real difference.”
The six-month result reflected our efforts in providing customers across all sectors with innovative products and services at competitive prices said Mr Thodey. “We have more new products and services coming to market in the months ahead that will enable our customers to be even better off, and while business conditions will soften further in the next six months, Bank of New Zealand is well-positioned to meet the continuing challenges of the market.”
* After re-statement for the introduction of International Financial Reporting Standards (IFRS). The six months to March 2006 is the first time that Bank of New Zealand has reported its financial performance using IFRS reporting standards, and therefore results are not directly comparable with the same period last year.