BNZ posts half-year profit drop of 5.3%

Thursday, 2 May 2024

BNZ grew its lending, but a sluggish housing market meant that growth was modest.

Bank of New Zealand made an after-tax profit of $762 million in the six months to the end of March.

That represented a $43m fall in profit on the same period last year when BNZ made an after-tax profit of $805m.

The announcement on the Australian ASX sharemarket by BNZ’s parent bank National Australia Bank (NAB) came the day after the Reserve Bank Te Pūtea Matua said bank profitability was declining.

It also comes a day after NAB completed the sale of its wealth and investment business to the newly-established FirstCape, which it has taken a 45% ownership stake in.

FirstCape brings together JBWere New Zealand, Jarden Wealth, Harbour Asset Management and BNZ Investment Services, and has 113 advisers and manages and advises on $44billion of investor funds.

BNZ chief executive Dan Huggins said the result showed resilience in a subdued economic environment and the bank remained in a strong position.

‘Our teams continue to proactively contact customers who we have identified as potentially needing additional support. For customers feeling under pressure, our message is get in touch,’ says BNZ’s chief executive Dan Huggins.

He acknowledged the pressure households were under from high mortgage rates.

“High interest rates and cost of living pressures continue to impact business and household finances,” he said.

“While easing inflation is encouraging, it is expected to remain outside of the Reserve Bank’s target band until the end of year. Economic conditions are likely to remain challenging until there is a material reduction in interest rates.”

The Reserve Bank said yesterday that around 85% of home loans had now repriced from low rates. It also forecast a rise in households falling behind on their home loans.

BNZ’s revenue for the first six months was broadly flat at $1.77b, while the bank’s margins on loans dropped slightly, which it said reflected strong competition across the banking sector and a change in deposit mix as customers shifted funds into term deposits to take advantage of higher interest rates.

BNZ increased its total lending by $2.4b or 2.4% in the first six months, with home lending up $1.1b or 1.9% and business lending up $1.3b or 3%. Total customer deposits increased by $1.5b or 1.9%.

After a year in the media spotlight has been trained on bank fraud protections, Huggins said BNZ continued to invest heavily in fraud protections.

BNZ’s operating expenses rose by $64m.

More to come