BNZ posts $181M loss on tax, cash earnings fall

Bank of NZ posts $181M loss on tax charge, cash earnings fall 13%

Oct. 28 (BusinessWire) – Bank of New Zealand, the local unit of National Australia Bank, posted a full-year loss after taking a provision for its tax case loss. Cash earnings fell 13% on increased bad debt provisions and increased funding costs.

The BNZ group reported a loss of $181 million, mainly reflecting the one-off tax case provision of $661 million, the lender said in a statement today. Cash earnings fell 13% to $420 million. The bank’s net interest margin fell 29 basis points to 2.13% while the provision for bad and doubtful debts more-than doubled to $185 million.

“We are emerging from a tough year with a sound balance sheet, good asset quality and strong capital ratios,” said chief executive Andrew Thorburn. “We’re cautiously optimistic about the medium-term picture for NZ, anticipating modest GDP growth of around 2% over the next two years.”

BNZ’s capital ratio was 10.88%, above the central bank’s minimum requirement of 8%. Parent National Australia posted a 43% decline in profit in the 12 months through Sept. 30, reflecting a jump in charges for doubtful debts and weakening earnings at its unit in the U.K., where the economy has been mired in recession.

Net income fell to A$2.59 billion from a year-earlier A$4.54 billion a year ago, the Melbourne-based lender said in a separate statement. The provision for bad and doubtful debts rose by $2.3 billion to A$3.8 billion. Total provisions rose to A$5.1 billion from A$3.3 billion.

The rate of increase in bad-debt expenses moderated in the second half, it said. The Tier 1 capital ratio rose 65 basis points to 8.96%.

“In a weak economic environment when confidence levels within financial markets were still fragile, we had to strike a careful balance between the various expectations of our shareholders, customers and the community,” said chief executive Cameron Clyne.

(BusinessWire)

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