BNZ outlines earthquake losses

The Bank of New Zealand (BNZ) is expecting credit losses from the two big Christchurch earthquakes of up to $60 million, its parent National Australia Bank (NAB) says, having made provisions of this size to cover them.

NAB made this comment in its interim results, which show a 11 per cent rise to NZ$283 million in New Zealand cash earnings. The group says the rise reflects "robust" underlying profit growth of 10.5 per cent and increased margins because of "repricing for current market conditions" and rising customer demand for more lucrative variable, or floating, rate housing loans.

Lending volume growth was modest in New Zealand, NAB said, in light of a subdued housing market and weak demand for business credit.

Customer deposits grew by 9.7 per cent and market share for retail deposits rose 60 basis points to 18.1 per cent.

"New Zealand is continuing its slow economic recovery from the recent recession although the earthquakes in Christchurch have slowed the rate of recovery," NAB said.

"The earthquakes provision includes an amount taken during the prior financial year as a result of the first (September) earthquake."

The NAB group, meanwhile, recorded a 22 per cent rise in cash earnings for the six months to March to A$2.7 billion.

- INTEREST.CO.NZ