Mortgages help BNZ to $283m first-half profit

By PAULA OLIVER

Another of the big five banks has reported a healthy profit and significant growth in the mortgage market - this time the Bank of New Zealand.

BNZ, owned by National Australia Bank, yesterday announced a net profit of $283 million for the half year to March 31.

On the surface BNZ's profit fell compared with the corresponding period last year, which returned a net profit of $317 million.

But last year's figure included one-off gains of $83 million relating to the sale of its wealth management unit and a tax matter.

BNZ managing director Peter Thodey said that without the one-offs in the picture, the bank's result was strong - with an underlying profit increase of 21 per cent on last year.

Thodey said a key contributor to the result was an 11 per cent increase in housing lending volume across the country.

Two of the other big five banks, ANZ and Westpac, have already reported strong growth in the mortgage market in their half year results.

Auckland's booming and profitable housing market was cited as the primary cause of Westpac's growth, but BNZ yesterday avoided making geographical divisions.

BNZ's general manager of finance, Mark Hosking, said the bank's mortgage growth was nationwide, and that BNZ did not have any reliable external statistics that would enable it to say how it was going in the Auckland market.

"The only comment I could make is that we think we are competitive, and we would equally see it [Auckland] as an important focus for us as well."

BNZ's net interest income rose $52 million to $441 million in the half year, while its underlying cost to income ratio fell 2.9 per cent to 44.5 per cent.

Thodey said that a focus on efficiencies had helped to improve the ratio.

The bank's operating expenses rose by $18 million to $311 million, partly because of a programme to refurbish branches and refresh BNZ's brand with a new advertising campaign. Refurbishments will continue in coming months.

Hosking said that the bank's expenses were also increased by property - BNZ's Wellington head office had been sold and was now leased back.

Deposits in the BNZ grew 5.2 per cent to $24.237 billion, and the bank now carries loans totalling $30,564 billion.

Thodey said that the period had seen higher than expected economic growth, but various factors, including the rise in the exchange rate, labour shortages and Sars, would slow growth for the next 6-12 months.

"This slowdown will inevitably have an impact on the financial services sector in the second half of the year."


Half-year highlights:

* BNZ said underlying profit for the period was up 21 per cent to $283 million.
* Nationwide housing lending volumes rose 11 per cent.
* BNZ has attempted to revitalise its brand by refurbishing branches and launching a new ad campaign.
* Retail deposits grew by 9 per cent.
* 14 Smart ATMs were installed.
* Managing director Peter Thodey predicted that slowing economic growth would have an impact on the second half of the year.