Biz Week Ahead: Red ink tipped for BNZ owner

BNZ's owner, the National Australia Bank, is reporting first half earnings on Thursday. Photo / Bay of Plenty Times

National Australia Bank, owner of the Bank of New Zealand, is expected to report a lift in its first half earnings on Thursday, although the result will contain some red ink.

The BNZ's parent said last month that it had scrapped plans for a sale of its problematic British banking operations.

NAB, which operates 337 Clydesdale and Yorkshire bank branches, looked at a number of options, including a sale but had decided instead to scale back its British business, to close its commercial real estate business and to focus on lending to small and medium businesses in the north of England and Scotland.

NAB expects first half cash earnings of around A$2.82 billion, up 5.7 per cent, from the previous comparable period, but it expects the UK unit to post a loss of 25m pounds.

The bank will be the last of the Australian "big four" to report its first half result.

The other three have all reported sharp increases in earnings.

Power generator and retailer TrustPower is expected to announce a strong lift in earnings when it reports its annual result on Friday.

TrustPower is involved in renewable energy in New Zealand and has a 98 megawatt Snowtown wind farm in South Australia.

Forsyth Barr analyst Andrew Harvey-Green expects the company to report a net profit of $126.6 million for the March 31 year, up from $112.4m in the previous year.

He expected the result to show the company benefited from the commissioning of the Mahinerangi windfarm last year and from favourable power generation conditions and wholesale power prices.

TrustPower has signed a power sale and purchase agreement with Australia's Origin Energy to take 100 per cent of the output from the 270 megawatt Snowtown II _ an extension of the 98mw Snowtown windfarm that has been operating for four years.

The signing of the agreement is a major step in getting the windfarm off the ground.

TrustPower has not disclosed the expected cost of the windfarm, but Forsyth Barr expects it will come to around $630m.

The company is seeking an investor for the development.

Forsyth Barr expects TrustPower's earnings before interest, tax, depreciation and amortisation to come to $302.9m, up 10.4 per cent on a year earlier.

Harvey-Green expects TrustPower, which is half owned by Infratil, to raise its total dividend for the year to 41cps, up 2c.

Elsewhere in the week, Property for Industry (PFI) is set to report its first quarter result on Monday.

Jeremy Simpson, property analyst at Forsyth Barr, said he expects the result to cast some light on leasing trends, vacancy rates and rental levels.

"We are at the point where the property market has stabilised and there are some signs of a recovery in Auckland," he told APNZ.

"The prime industry sector is an area that is showing some signs of improvement, although it is still competitive in the rental area," he said.

The quarter will be the first under the management of McDougall Reidy, who bought the PFI management from AMP last year.

McDougall Reidy is a large, private company whose business focus is property development, investment and management.

On the economic front, electronic card transaction data for April is due on Wednesday.

Elsewhere during the week, Postie Plus will hold a special meeting on Friday to vote on the company's proposal to sell its Babycity chain of stores.

The clothing retailer, expects to reap $4.1m from the sale.

To recap events from the week just past:

- Ironbridge Capital appointed Macquarie Capital to advise on its options for waste management company, EnviroWaste.

- The New Zealand units of ANZ and Westpac both reported strong first half results.

- Unemployment was surprisingly high in the first quarter, coming in at 6.7 per cent against market expectations of 6.3 per cent.

The result has increased the possibility of a 25 basis point cut in the official cash rate, as threatened by the Reserve Bank at is cash rate review last month.