Bank of New Zealand's parent, National Australia Bank, says its New Zealand subsidiary performed well in the June quarter although lending volume growth - notably in the business sector - remained weak.
NAB's comments came as it revealed unaudited cash earnings of A$1.4 billion in the June quarter, up from A$1.1 billion in the same period of last year.
"New Zealand Banking, despite the Christchurch earthquakes and slow recovery from recession, recorded sound earnings and revenue growth, with continued good expense management," NAB CEO Cameron Clyne said in the bank's release to the Australian Stock Exchange.
However, he noted that lending volume growth in the business sector remained subdued. Reserve Bank sector credit data shows business debt rose just NZ$16 million to NZ$72.348 billion in the three months from April to June and agriculture debt increased NZ$50 million to NZ$47.251 billion. Total household claims (housing and consumer loans) rose NZ$712 million to NZ$184.103 billion.
Clyne said BNZ customers switching from fixed to floating rate mortgages continued to support margins. A focus on growing customer deposits and June's A$700 million issue of five-year covered bonds in Australia increased term funding and diversification. The latest Reserve Bank figures show that, as of June, NZ$94.637 billion, or 56%, of the country's total NZ$169.118 billion worth of home loans were on floating rates.
"The charge for bad and doubtful debts improved although risks remain, particularly in the business sector," Clyne said. "The ratio of 90+ days past due and gross impaired assets to gross loans and acceptances reduced from 1.96% at March 31 to 1.76% at June 30," Clyne added of the group's New Zealand operations.
BNZ's financial results for the six months to March 31, released in May, showed its net interest margin unchanged from the first-half year at 2.24% with net interest income up just 0.3% to NZ$640 million. The bank grew gross loans in the half-year by just 0.7% to NZ$55.4 billion.
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