'Challenging' conditions hit BNZ's half-year result

BNZ reported a 3.8 per cent fall in half-year headline net profit to $400 million, as increased bank funding costs and an expected rise in bad debt charges hit earnings.

The bank said net operating income rose 2.7 per cent from a year earlier to $1.04 billion for the six months to the end of March, including net interest income up 3.4 per cent to $704m.

That took underlying profit, before the increased charges for bad and doubtful debts, to $669m, a 9.7 per cent increase.

BNZ has two main operating units contributing to its result - New Zealand Banking which includes Retail, BNZ Partners and Insurance businesses, and its BNZ Capital business.

New Zealand Banking reported an underlying profit after tax of $228m for the six months, down $11m on the previous March result.

Managing director Andrew Thorburn said increased bank funding costs along with an expected rise in bad and doubtful debt charges were the two key drivers of the lower earnings result.

Bad and doubtful debt charges for New Zealand Banking increased to $96m, up $66m on the same period last year. Those provisions were from a historically low base, with the actual level of net write-offs remaining low at 0.13 per cent of gross loans.

Non-housing loans, primarily business lending, was up $4.13 billion or 16.4 per cent compared with the previous March result.

BNZ Capital's revenue rose up $135m, or 96.2 per cent.

Parent company National Australia Bank, Australia's biggest lender, today reported a 9.4 per cent fall in half-year cash earnings to A$2 billion ($2.56b). That was after bad-debt charges jumped two and a half times to A$1.8 billion, negating a 11.5 per cent rise in revenue generated mainly by domestic banking and trading.

NAB's interim dividend fell 24.7 per cent to A73 cents a share.

- NZPA