BNZ posts $181m loss on tax charge

BNZ, the local unit of National Australia Bank, posted a full-year loss after taking a provision for its tax case loss. Cash earnings fell 13 per cent on increased bad debt provisions and increased funding costs.

The BNZ group reported a loss of $181 million, mainly reflecting the one-off tax case provision of $661 million, the lender said in a statement today. Cash earnings fell 13 per cent to $420 million. The bank's net interest margin fell 29 basis points to 2.13 per cent while the provision for bad and doubtful debts more-than doubled to $185 million.

"We are emerging from a tough year with a sound balance sheet, good asset quality and strong capital ratios," said chief executive Andrew Thorburn. "We're cautiously optimistic about the medium-term picture for NZ, anticipating modest GDP growth of around 2 per cent over the next two years."BNZ's capital ratio was 10.88 per cent, above the central bank's minimum requirement of 8 per cent.

Parent National Australia posted a 43 per cent decline in profit in the 12 months through Sept. 30, reflecting a jump in charges for doubtful debts and weakening earnings at its unit in the U.K., where the economy has been mired in recession.

Net income fell to A$2.59 billion from a year-earlier A$4.54 billion a year ago, the Melbourne-based lender said in a separate statement. The provision for bad and doubtful debts rose by $2.3 billion to A$3.8 billion.

Total provisions rose to A$5.1 billion from A$3.3 billion.The rate of increase in bad-debt expenses moderated in the second half, it said. The Tier 1 capital ratio rose 65 basis points to 8.96 per cent.

"In a weak economic environment when confidence levels within financial markets were still fragile, we had to strike a careful balance between the various expectations of our shareholders, customers and the community," said chief executive Cameron Clyne.

-BUSINESSWIRE