Bank of New Zealand, the local unit of National Australia Bank, lifted annual earnings 2.4 per cent as the lender lifted lending to businesses and households and reported smaller charges on bad debts.

BNZ's cash earnings rose to $807 million in the 12 months ended September 30 from $788 million a year earlier, Australian parent NAB said in a statement. Net interest income rose 3.1 per cent to $1.51 billion, while impairment charges on bad and doubtful debts (B&DD) shrank to $87 million from $99 million in 2013. Statutory net profit, which includes movements in the value of financial instruments and incorporates wholesale operations reported in NAB's Australian banking unit, rose 22 per cent to $850 million.

"Business lending experienced steady growth, and there was a solid pick-up in housing lending growth in the September 2014 half year," NAB said referring to its NZ banking unit. "Asset quality metrics improved and the charge for B&DDs fell over the year, but increased over the six months to September 2014 due to a small increase in specific charges."

The New Zealand unit contributed about 14 per cent to Melbourne-based NAB's group cash earnings of A$5.18 billion in the year, which was down 9.8 per cent from a year earlier due to A$1.5 billion of charges relating to higher costs of administering complaints in the UK, software impairments, tax asset provisions and research and development tax changes. Group net profit, which includes movements in the value of financial instruments, fell 1.1 per cent to A$5.3 billion.

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See BNZ chief executive Anthony Healy speaking to the NZ Herald in our "Meet the CEOs" business video series:

BNZ chief executive Anthony Healy talks to the Business Herald’s Christopher Adams about his first five months in the top job, a recent management reshuffle and the bank’s strategy around tackling non-traditional competitors such as peer-to-peer lenders.