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BNZ Annual Underlying Net Profit Rises 9 Pct

Fuseworks Media
Fuseworks Media

Wellington, Oct 21 NZPA - Bank of New Zealand boosted underlying annual net profit by 9 percent to $657 million, but warned that provisions had increased for impaired loans.

Including one-off gains and accounting adjustments, net profit for the year ended September was up 15 percent to $785m.

Cash earnings rose 12 percent to $482m, driven by revenue growth and focus on profitable market share, BNZ chief executive Andrew Thorburn said.

Cash earnings, which exclude one-off items and non-cash accounting items, form the basis for dividends payable to shareholders.

Customer deposits were up 7 percent to $25.9 billion.

Lending volumes were up 10.2 percent at $52b, strong but slowing from the rates of growth seen in recent years.

"A conservative approach to lending has ensured the quality of the BNZ loan book," Mr Thorburn said.

"While provisions have increased for impaired loans, this is from historically low levels and the overall asset quality remains strong."

The corporate and institutional banking arm boosted revenue by 13 percent, down from a 30-percent increase the previous year, but beating the rise in BNZ group revenue of 5 percent.

Net interest income rose to $1.3b from $1.2b a year earlier

Standard & Poor's affirmed BNZ's AA rating last month.

"BNZ has a very strong foundation to build on in a challenging 2009 financial year. While the economy faces difficult circumstances, BNZ is in a sound position," he said.

BNZ's parent National Australia Bank -- Australia's biggest lender -- warned that a significant housing downturn in New Zealand and the United Kingdom had lowered mortgage growth.

"The combination of recessions in New Zealand and the UK, alongside the projected slowing of growth in Australia, will inevitably affect asset quality," the bank said.

NAB had already released headline profit numbers, including a 28 percent fall in second-half cash profit, last week.

NAB today reported a 0.9 percent fall in reported annual net profit to $A4.54 billion ($NZ5.16 billion). Annual cash earnings fell 10.7 percent to $A3.9 billion, in line with forecast.

Excluding provisioning, NAB's underlying annual result was $A8.1 billion, up 13.9 percent.

Mr Thorburn, formerly NAB's executive general manager of retail banking in Australia, replaced outgoing chief executive and managing director Cameron Clyne at the start of the month.

Mr Clyne is group chief executive-designate for NAB.

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