BNZ lifts first-half profit 12.2% as lending grows and margins fatten
By Jenny Ruth
May 2 (BusinessDesk) - Bank of New Zealand’s first-half net profit jumped 12.2 percent, boosted by gains on the sale of its 25 percent stake in Paymark and increased business and housing lending.
The bank, which is owned by National Australia Bank and is the smallest of the “big four” mortgage lenders but the second largest by total assets, reported a $550 million net profit for the six months ended March, up from $490 million in the same six months a year earlier.
“We have purposefully realigned the business to deliver improved customer outcomes and we’re encouraged by our progress to date and excited about the future,” says BNZ chief executive Angie Mentis in a statement.
Banks talking about “customer outcomes” has become fashionable in banking circles since the findings of Australia’s royal commission into financial services and Mentis says her bank has provided “a comprehensive response” to the joint review of bank culture and conduct by the Reserve Bank and Financial Markets Authority.
“Our response highlighted BNZ’s focus and resolve on conduct to do the best we can for our customers and outlines our plan to meet the increasing expectations of our customers and stakeholders,” Mentis says.
“Proactively fixing issues where we find them is key to delivering great customer outcomes and continuing to listen and proactively support New Zealanders is the right thing for BNZ to do,” she says.
Unlike ANZ Bank, which yesterday reported falling net interest margins, BNZ expanded its margin by 6 basis points to 2.30 percent in the latest six months from the previous first half.
ANZ New Zealand division’s net interest margin is still higher than BNZ’s, easing to 2.38 percent in the latest six months from 2.42 percent.
NAB’s results and presentation show BNZ’s business lending, including the agricultural sector, rose 4.7 percent to $42.2 billion from the previous first-half and retail lending rose 8.1 percent to $42.7 billion.
BNZ’s share of the mortgage market rose 20 basis points to 15.9 percent and its share of business lending rose 10 points to 23.6 percent.
However, its share of lending to agribusiness eased 50 basis points to 22 percent and its share of retail deposits fell 40 basis points to 18.1 percent, largely because term deposits fell 130 basis points to 18.1 percent (other types of deposits are categorised as transactional or savings).
NAB’s results also show that mortgage brokers now account for 17.7 percent of BNZ’s mortgage origination, up from 13 percent a year earlier.
BNZ resumed dealing with mortgage brokers in 2015 after 12 years of refusing to have anything to do with them.
The NAB results also show that owner-occupied mortgages account for 65.4 percent of BNZ’s mortgage book, up from 63.8 percent a year earlier, and that interest-only mortgages account for 21.4 percent of its book, down from 22.8 percent a year earlier.
NAB reported a A$2.69 billion net profit for the six months, up 4.3 percent, although that included a further A$525 million in costs to fix problems uncovered by the royal commission.
NAB also cut its dividend and reinstituted its dividend reinvestment plan to help shore up its capital position to the Australian Prudential Regulation Authority’s “unquestionably strong” level of 10.5 percent of risk-weighted assets.