BNZ in record line-up

By KEVIN TAYLOR

Another day, another bank result, and another record profit.

This time it was the turn of the Bank of New Zealand, owned by the giant National Australia Bank, to record a healthy increase in net profit and another record year.

Overall net profit for the year to September 30 was $582 million, up 32 per cent on the $440 million achieved the previous year.

NAB returned a profit of A$3.37 billion ($3.86 billion) for the September year. That was up 62 per cent from A$2.08 billion the previous year, which was a hit by writedowns on failed US mortgage venture Homeside.

The BNZ result included a one-off, the sale of BNZ Investments and Insurance.

Excluding the one-off, the BNZ scored a net profit of $516 million, up 17.3 per cent on the previous year.

BNZ managing director Peter Thodey said strong growth in core lending and deposit volumes lifted net interest income by 11 per cent.

Retail deposits rose 15 per cent and house lending rose 8 per cent.

Interest margins increased to 2.43 per cent from 2.28 per cent, and income from fees remained relatively flat.

Thodey said investment in technology, enhancements in banking services, staff training and product development contributed to the growth. "The result allows the opportunity for further investment in these areas."

Another key driver of growth had been software launched last November, which allowed more effective anticipation and identification of customer needs.

The software alerts staff of significant events on customer accounts - like term deposit maturity - so they can contact customers when they may be reassessing their financial needs.

Thodey said the economy was likely to slow during the next 12 months, with overseas demand expected to weaken in response to an uncertain global environment.

"However, there will be a good underpinning to New Zealand growth from continuing strong inward migration, low interest rates, a cyclically strong housing market and business investment to meet capacity constraints."

In January, the BNZ sold its subsidiaries BNZ Investment Management, BNZ Life Insurance and BNZ Nominees to another NAB member.

All five big banks have announced record results during the year, and all are achieving higher than the commonly cited benchmark 1 per cent return on average assets.

Massey University senior banking studies lecturer David Tripe has said that banks' profits are verging on excessive when they consistently achieve a return over 1 per cent.

NAB forecast cash earnings per share growth of 8-11 per cent for 2003.

The fresh earnings forecast was slightly below the 12 per cent target Australia's biggest bank tipped in April.