BNZ makes $1.32 billion profit
Tuesday, 9 November 2021
Bank of New Zealand has reported an after-tax profit of $1.32 billion for the year to September 30 up $560 million on last year.
BNZ the third of the big four Australian-owned banks to post a huge rise in profits, partially generated by banks unwinding provisions for bad debts, made last year when they feared many households would struggle to pay their home loans.
ANZ’s profit of $1.91b after tax was up 39 per cent on the previous year, and Westpac's $1.01b profit was up 56 per cent on the previous year to the end of September.
BNZ chief executive Dan Huggins, who was promoted in October, said the profit rise was driven by a strong bounce-back in the economy.
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The annual report of BNZ's Australian parent bank National Australia Bank said a return to covid trading restrictions in August, had led to a rapid slow-down in electronic card transactions, which indicated a sharp economic slowdown during the end of its financial year.
“The domestic restrictions put in place, as well as the suspension of the Australia-New Zealand travel bubble in July 2021 are likely to lead to a large fall in GDP in the September quarter,” the bank said.
Huggins headed the bank’s vaccination drive, mirroring the efforts of rival bank chief executives, resulting in high vaccination rates at the five big banks.
Huggins said BNZ was strong, stable and well-capitalised, and had supported businesses throughout the pandemic disruption to the economy.
“We were the leading lender under the Government backed Business Finance Guarantee Scheme and our own Good to Grow scheme has supported businesses with nearly $300 million to help drive sustainability, productivity, growth and expansion plans,” Huggins said.
“We cut merchant and contactless fees, which has helped to reduce costs for businesses and enable them to provide contactless payments, and our Direct Cash service has streamlined change orders and reduced the need for physical contact,” Huggins said.
The big jump in profits should not be seen as the bank making a super profit, however, he said.
“It’s a very large business. We have $120b of assets invested in New Zealand. We have $11.5b of capital,” he said.
The bank was also moving to become a more climate-friendly operator, he claimed.
“We’re incentivising environmental and social improvements through new lending products, integrating environmental, social and governance considerations into our decision-making and working with customers to transition to a low carbon future,” he said.
Huggins said in the last 12 months, the bank had supported 4678 New Zealanders into their first homes.
BNZ helped 11,764 New Zealanders to renovate and invest in existing properties and supported the development of more than 1600 new home builds, Higgins said.
The bank’s economists were not forecasting house prices to fall despite increases in interest rates and housing development, but they were not expecting them to rise much either, Huggins said.
“We’re not forecasting drops at the moment, but there are downside risks to the market,” he said.
But there were risks, and among those noted in the NAB annual report wasthat “adverse business conditions in Australia and New Zealand, particularly in the agriculture sector, may give rise to increasing customer defaults.”
When ANZ announced its nearly $2b profit on October 28, chief executive Antonia Watson said the results reflected record lending demand in the housing market, a stronger-than-expected economy, and a significant reduction in provisions for bad debts.
Simon Power, Westpac New Zealand acting chief executive, denied the bank had made a super profit, when it reported its latest return on November.
“We have $100b on the balance sheet, so our profit represents about a 1 per cent return on that,” Power said.
“Last time I counted we had 15 banks in the New Zealand market for 5 million people, so plenty of choice there,” Power said.