New Zealand banks go from strength to strength despite global market uncertainties
New Zealand Banking Perspectives analyses the reported results of New Zealand’s five major banks (Westpac, ASB, ANZ National, BNZ and Kiwibank). The latest February edition has revealed core earnings growth of 25% in the second half of their 2011 financial years (2H11), up from $2.3 billion (bn) from the previous six months (1H11).
This result in a challenging environment was driven by growth in both net interest income and other operating income, and a modest reduction in operating expenses. Bucking this trend, bad debt expenses were up by $24 million.
Financial Services Partner Sam Shuttleworth says "The five majors' pre-tax profits are up 28% to $2.4 billion, yet banks need to remain focused as rain clouds over Europe caused by the Eurozone debt crisis emerges as the biggest concern facing our major New Zealand banks."
The PwC report found the main driver behind the banks' income growth has been the ability to increase net interest margins to stimulate returns, as lending portfolios remained flat for the second half of 2011 at $276.3bn.