Bank of New Zealand (BNZ) has today reported cash earnings for its New Zealand banking operations* for the year ended 30 September 2011 of $612 million. This is an increase of $88 million or 16.8% compared to the 2010 financial year.
BNZ CEO Andrew Thorburn said, "This is an excellent result for BNZ amid tough local trading conditions and ongoing global economic fragility."
"This strong full year result is built on our continued support of customers, solid revenue and deposit growth and prudent cost management."
BNZ's continuing focus on deposits has seen excellent growth when compared to September 2010.
BNZ has grown retail deposits from $28.3 billion in the prior financial year to $31.1 billion, an increase of $2.8 billion or 9.9%. Market share in deposits has also grown from 17.7% in September 2010 to 18.2%.
"It's vital that we continue to strengthen our balance sheet in today's volatile global environment.
This enables BNZ to continue providing customers with access to funding at reasonable rates. We've maintained our strong rating by being profitable and efficient, by our ongoing rebalance towards customer deposits and by diversifying and lengthening our wholesale term funding profile with our issuance of covered bonds."
BNZ's capital levels are well above the regulatory minimums and have been further strengthened from the prior year. BNZ Banking Group's Tier one capital ratio was 8.99% and total capital ratio was 11.84% as at 30 September 2011.
"We're extremely pleased to have further strengthened the fundamentals of the bank in a challenging global environment," said Mr Thorburn.
BNZ's revenue for the full year, at $1,775 million has improved compared to $1,675 million for the previous year. Lending growth for the bank remained modest due to the subdued housing market and weak overall demand for business credit, in line with the New Zealand system trend.
*BNZ's New Zealand banking operations include Retail, Business, Agribusiness, Corporate and Insurance businesses. It excludes BNZ's Wholesale banking operations.
Nonetheless BNZ has grown lending market share in key segments over the past year, including housing from 15.8% to 16.2% and agribusiness from 19.2% to 20.5%. In total, BNZ's share of business lending1 has increased from 25.8% to 26.5%.
Andrew Thorburn said, "While deleveraging is still a trend, we're seeing real strength in some corporate balance sheets and well structured companies are taking advantage of sustained demand for New Zealand commodities.
"This year we also saw a reduction in impaired loans and resulting bad and doubtful debts."
Bad and doubtful debt charges have decreased by $36 million in the current year, from $187 million in the previous year to $151 million.
"While we're seeing a local economy that's struggling to gain growth momentum we remain optimistic about the long term economic outlook with favourable stimulus to come from the eventual Christchurch rebuild, solid export volumes and continued global demand for our commodities," he said.
BNZ continues to be cautious about the effects of the February 2011 earthquake and related after-shocks, and closely monitors the adequacy of provisions.
"During this time of upheaval for Canterbury we've worked hard to support our customers in the region through the special assistance lending and "Red Zone" support packages. We've retained all staff and services in the region and have relocated into a number of new locations. Right now we're looking forward to opening a brand new state of the art BNZ Partners Business Centre in the high-tech industrial park at Russley," said Mr Thorburn.
BNZ's continued drive to enhance its customers' experience has led to a number of innovative developments. Earlier this year BNZ became the first New Zealand bank to develop and deliver mobile banking across all three mobile platforms; the mobile web, iPhone and Android.
BNZ has begun to offer Renminbi FX transaction facilities and a new office due to open in Shanghai for National Australia Bank will strengthen the support to our BNZ Corporate and Business Banking clients operating in, or trading with China.
The bank has created a dedicated small business team and is the only New Zealand bank with small business specialists available seven days a week.
"The small business customer doesn't keep regular office hours, so neither can we. Adapting to their needs and launching a world first offsetting product for Small Business, with our Total Money offering, has contributed to an increase in small business market share for us," said Mr Thorburn.
BNZ is part way through a $200 million investment in the transformation of its retail stores and Partners network with 81 retail stores completed and 26 out of a planned 31 BNZ Partners Business Centres already up and running.
On 9 March 2011, nearly 3,000 BNZ staff worked as volunteers for over 500 different community projects across the country in an initiative called "Closed for Good". BNZ is the first carbon neutral bank in New Zealand and one of the largest organisations in New Zealand to achieve carbon neutrality.
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