Banking: Four years of strong returns for big six

New Zealand's biggest banks have enjoyed good financial performances for the 16th successive quarter.

All six of the main retail banks achieved at least 1 per cent return on assets in the November 2002 quarter, earning an aggregate 1.31 per cent, Massey University's regular study of the banking sector showed.

Profits had been above the benchmark 1 per cent for four years, said senior banking lecturer David Tripe.

The banks' underlying profitability was modest, but net interest income was up, he said, which cut across a belief that previous reductions were due to competition.

Underlying profitability (before bad and doubtful debts, unusuals and tax) ranged from 2.05 per cent to 2.07 per cent of average total assets, and non-interest income was comparatively sedate at 1.21 to 1.28 per cent.

Tripe said that was more likely to have come from a recovery in performance than fee increases.

Net interest income rose from 2.53 per cent to 2.67 per cent of average total assets, and was at its highest level since December 1997.

The reasons for that were not obvious, Tripe said. However, for the past two quarters there had been a growing gap between the cost of deposits and the 90-day bill rate.

The survey looks at the ANZ, ASB, BNZ, Westpac, National Bank and the TSB, which, with the Commonwealth Bank of Australia, account for just over 84 per cent of New Zealand banking assets.

- NZPA