BNZ outperforms its Australian parent

By KEVIN TAYLOR

The Bank of New Zealand has outperformed its Australian parent by posting a record after-tax profit in the September year while its parent's profit fell by more than a third.

The BNZ made $440 million, up 13.1 per cent on last year's $389 million net profit. Its owner, National Australia Bank, made $2.58 billion ($A2.083 billion) net profit, down 36 per cent.

The result came amid Australian media reports that a leading market analyst, JP Morgan's Brian Johnson, has predicted NAB may shed up to 5000 jobs next year.

The New Zealand Finance Sector Union said NAB was about to embark on a $500 million cost-cutting programme and had hired McKinsey & Co to do a "sweeping growth and performance improvement" review over three months.

Whether job losses will hit the high-performing BNZ is unknown.

General manager of finance Martin Philipsen confirmed yesterday that BNZ was included in the review, which was to drive long-term growth.

Early this week, BNZ corporate relations head David Browne said talk of job cuts was just speculation.

Four of the five big New Zealand banks have reported this year and all performed well.

In August, ASB Bank reported a 22 per cent rise in net profit in the June year.

Last month, ANZ outperformed its Australian parent and posted a 31 per cent rise in net profit.

Last week, WestpacTrust reported a record result, with net profit up 14 per cent, again ahead of the Australian parent. National Bank reports in mid-February on the December year.

BNZ managing director Peter Thodey said its strong result came against a background of modest economic growth.

Net interest income - up 13.2 per cent to $753 million - was a major contributor to the strong result, driven by growth in home loans and deposits.

The bank achieved 9.1 per cent growth in home loan volumes while retail deposits grew 16.8 per cent.

Mr Thodey said BNZ continued focusing on lending growth, margin management and cost control.

The overall interest margin had gone from 2.21 to 2.28 per cent, and income from bank fees was "fairly flat".

He said that over the next year there would be continued uncertainty and the New Zealand economy would not escape unscathed.

NAB announced a final fully franked dividend of 68c compared to 64c last year.

It also recorded a rise in doubtful debt provisioning to $A989 million compared to $A588 million in the previous year.

Managing director Frank Cicutto said the group result was significantly affected by the sale of US unit Michigan National and the writedown in the value of American mortgage service company HomeSide.

The outlook for the coming year was heavily influenced by the performance of the global economy, particularly the US.

"We expect conditions across all markets to be subdued during the first half of the financial year," he said.

However, he said interest rate cuts and fiscal policy should then help to stabilise global activity with the main markets of NAB's operation - Australia, New Zealand and the UK - doing better than most.

* PSIS announced an operating profit of $3.1 million for the six months ended September, compared to $3.9 million in the same period last year.

For the half, total assets were up 3.1 per cent to $577 million, deposits rose 3.5 per cent to $495 million and loans climbed 3.7 per cent to $406 million.