New BNZ boss Angela Mentis says low numbers of complaints and the success of the Banking Ombudsman service are some of the reasons why she doesn't believe New Zealand needs a banking inquiry.
New BNZ boss Angela Mentis says low numbers of complaints and the success of the Banking Ombudsman service are some of the reasons why she doesn't believe New Zealand needs a banking inquiry.
New BNZ boss Angela Mentis says low numbers of complaints and the success of the Banking Ombudsman service are some of the reasons why she doesn't believe New Zealand needs a banking inquiry.
Mentis, who took over the top job in January after moving from parent company National Australia Bank, says it has already responded to a request by New Zealand regulators to provide evidence proving local banks are clean.
Financial Markets Authority chief executive Rob Everett and Reserve Bank governor Adrian Orr called a meeting with 15 New Zealand bank bosses on Monday following damning revelations from Australia's Royal Commission into misconduct in the financial services industry.
Speaking after the delivery of her first-half year result for the BNZ Mentis said she didn't think New Zealand needed to emulate Australia.
An example of that was New Zealand's financial adviser regime.
Mentis said BNZ employed 50 authorised financial advisers which were paid a base salary with a bonus based on a score card.
In Australia advisers were paid only by commission which meant they were aligned to sell bank products.
Mentis said customer complaints were also very low in New Zealand and of those complaints mis-selling was not a theme.
In the 12 months to March 31 BNZ recorded between 0.6 and 0.9 customer complaints per 1,000 customers each month.
"We just haven't seen the same sorts of mis-selling issues we have seen in Australia."
She said there had also been a significant overhaul of the law in New Zealand since the global financial crisis.
Financial Markets Authority chief executive Rob Everett and Reserve Bank governor Adrian Orr called a meeting with 15 New Zealand bank bosses on Monday. Picture / Supplied
The FMA had been set up and financial adviser law passed which was now going through an update.
Mentis said those were signs of a cultural willingness to respond to short-comings.
But the key was for banks to recognise mistakes quickly and act to resolve problems.
Mentis said BNZ was not complacent about the issues emerging from Australia.
"We will be ruthlessly vigilant in ensuring that our customers' trust in us is well placed," she said.
"In our focus to deliver a seamless banking experience, we assess global best practice in relation to conduct and are taking learnings from several recent financial sector inquiries across Australia, the UK and the US."
"The Royal Commission is helping shape this work, but our focus is deliberately broader than that to ensure we are across all relevant findings and learnings."
The BNZ reported a net profit of $490 million for the six months to March 31, up from $416m. Picture / Steven McNicholl
The BNZ reported a net profit of $490 million for the six months to March 31, up from $416m.
Mentis said the results illustrated a strong performance for the bank and its customers.
Operating revenue increased by 11.1 per cent to $1.17 billion.
Mentis said revenue growth was supported by strong business and housing lending growth and an improved net interest margin.
The bank's gross loans and acceptances increased by 4.7 per cent to $79.8b while its deposits increased 9.8 per cent to $58.2b.
Peter MacGillivray, BNZ chief operating officer, said he expected housing and business loan growth to continue on the back of strong economic conditions in New Zealand.
"While we have seen Auckland [housing market] slow down over the last few months in the last quarter it has gained a little bit of momentum."
While business confidence was weaker, consumer confidence remained high which meant people were still spending, he said.
The bank's net interest margin increased 9 basis points to 2.24 per cent on the back of lower funding costs.
MacGillivray said margin growth was high because of its strong deposit growth which meant it reduced the bank's reliance on borrowing from overseas.
Its deposit growth was higher than growth across the industry, boosting its market share of deposits. He expected that to remain stable for the rest of the year.
BNZ's credit impairments crept up rising $1m to $41m and its operating costs rose 7.4 per cent to $465m.
But MacGillivray said the credit quality of the loan book was still strong and impairments remained historically low.
Mentis said the biggest challenge for the business was meeting the shift towards digital and it was making a significant investment in the business to ensure it was aligning itself with customer needs and behaviour.
"We are accelerating an ambitious transformation strategy. Our sights are set on the changes that will make the biggest difference to our ability to consistently offer our customers a seamless banking experience."
The banks said more than 92 per cent of its transactions and 49 per cent of sales were now digital.
"Having the right resources in the right places will continue to be an area of focus for us.
"Our half-year results include an allowance for costs to support the reshaping of the bank with our focus on becoming faster, more personal and innovating across our digital platforms," Mentis said.
