The CEOs of BNZ and National Australia Bank explain the similarities & differences in our economies. Video / Carson Bluck
The new boss of National Australia Bank - the owner of Bank of New Zealand - plans to spend a disproportionate amount of his time here, with an eye to growing its earnings on this side of the ditch.
“We’re happy with the returns that we get in this business and we want to grow it,” Andrew Irvine told Markets with Madison on his fifth day in the job.
He was speaking at a Trans-Tasman Business Circle event in Auckland alongside BNZ chief executive Dan Huggins.
“Dan would love to be a bigger part of the broader National Australia Bank’s earnings mix ... I’d be open to that,” Irvine said.
Irvine was appointed as successor to NAB’s former leader, New Zealander Ross McEwan, in February. Based in Melbourne, he’s led its beefy business lending book since 2020.
“I’m obviously not from New Zealand personally, in the same way my predecessor was, and so I’ll probably spend disproportionately a bit more time here and a bit more time with you, Dan, just so that I can become more informed about the market and the business.”
Although, it seemed Irvine already knew a lot about the operation here. He and Huggins had been meeting for months.
A topic of interest may have been bank net interest margins - a measure of profitability - which, in this country, have grown in the past few years alongside wholesale rates, but Irvine said that was now changing, providing a challenge.
“Banks are now under pressure on their margins because customers are paying more for their borrowings.
“We’ve seen margins drop in both markets as a result.”
Bank of New Zealand chief executive Dan Huggins (left) and National Australia Bank's new chief executive Andrew Irvine.
Huggins explained how much its business and personal lending customers in New Zealand were struggling.
He said delinquency data, while worsening, did not show the full picture of pain. Based on the conversations he’d had with customers, he expected an uptick in arrears.
“I think they get worse.”
That could put pressure on NAB’s balance sheet, so Irvine said he planned to keep its provisions for bad debts high.
“I’m in no hurry to necessarily bring that down.”
Overall, Irvine was more optimistic, and did not expect Australia’s economy to enter a recession this year or next.
“When we compare to prior downturns, we aren’t seeing our book behave in the same way that it would have done in the past ... in both the home loan side and on the business side.
Watch the two titans discuss their banking brotherhood and the state of each economy in the 100th episode of Markets with Madison above.
Get investment insights from executives and experts on Markets with Madison every Monday and Friday here on the NZ Herald, on YouTube and wherever you get your podcasts.
Sponsored by CMC Markets.Disclaimer: The information provided in this programme is of a general nature, and is not intended to be personalised financial advice. We encourage you to seek appropriate advice from a qualified professional to suit your individual circumstances.
Madison Reidy is the host of the NZ Herald’s investment show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.
It’s been six months since I interviewed Rocket Lab chief executive Sir Peter Beck. We have a lot to discuss following the space company’s Q1 earnings! Video / Cameron Pitney
