Bank of New Zealand Analysis

Overview

BNZ was incorporated on July 29, 1861 and its ultimate parent bank is National Australia Bank Limited. The businesses and affairs of BNZ and all of its wholly owned entities (the Banking Group) are managed by, or under the direction or supervision of, the BNZ Board of Directors and the BNZ Chief Executive Officer in compliance with the requirements and regulations of the Banking Group's primary regulator, the RBNZ. BNZ is a registered bank under the Reserve Bank of New Zealand Act 1989.

The Banking Group is one of New Zealand's largest banking organizations and provides a broad range of banking and financial products and services to retail, business, agribusiness, corporate and institutional clients. The Banking Group is organised into three major operating and reportable segments: Private, Wealth & Insurance, Corporate & Institutional Banking and BNZ Partnership Banking. These segments are supported by the specialist units of Customer, Product and Services, Corporate Affairs, Finance, People, Risk, Technology and Operations, and Transformation and Strategy.

Performance

The following information was extracted from the Bank of New Zealand's half year results, released 2 May 2024:

HY24 Results: Resilient result in subdued economic environment

Bank of New Zealand (BNZ) today announced a statutory net profit of $762 million for the six months to 31 March 2024, a decrease of $43 million or 5.3% on the prior year. This reflects continued growth in BNZ’s lending and deposits, and an increase in operating expenses, up $64 million or 11.1%, as BNZ invested in its people and digital capability.

BNZ CEO Dan Huggins says this is a resilient result in a subdued economic environment and the bank is in a strong position to continue supporting its customers. “High interest rates and cost of living pressures continue to impact business and household finances.

“While easing inflation is encouraging, it is expected to remain outside of the Reserve Bank’s target band until the end of year. Economic conditions are likely to remain challenging until there is a material reduction in interest rates.

“Supporting our customers through these challenging times remains our top priority.

“Our teams continue to proactively contact customers who we have identified as potentially needing additional support. For customers feeling under pressure, our message is get in touch.” Revenue for the first six months was broadly flat at $1,770 million, while Net Interest Margin dropped by eight basis points on the prior year, reflecting strong competition across the banking sector and a change in deposit mix as customers shifted funds into term deposits to take advantage of higher interest rates. Mr Huggins says despite the challenging operating conditions, the bank has maintained momentum across the business.

“Our team is focused on serving our customers brilliantly every day and supporting their ambitions, whether that’s investing in their business or buying their first, or next, home.”

“This focus is paying off with more New Zealanders choosing to bank with BNZ.” BNZ’s total lending increased $2.4 billion or 2.4% in the first six months, with home lending up $1.1 billion or 1.9% and business lending up $1.3 billion or 3.0%. Total customer deposits increased by $1.5 billion or 1.9%.