BNZ boss unfazed by falling prices
BNZ has reported a profit increase of more than 7% in the six months to March 31, compared to the same time a year ago, supported by strong home loan growth.
It reported cash earnings up 7.1% to
$675 million for the half-year and statutory net profit up 7.4% to $709m.
Loans and advances to customers increased 7.8% compared to a year earlier – or more than $7 billion, of which $2b was lending to businesses.
BNZ said it had issued 5876 home loans in the six months.
Chief executive Dan Huggins said the current softness in house prices, which are down about 4% from their peak, had been expected. The bank had worked to make sure that customers were prepared for both increasing interest rates and potentially falling house house prices, he said.
He said it was hard to predict
how far house prices would fall but many expected between 10% and 15%. BNZ’s loan portfolio had an average loan-to-value ratio of 64% over the past 12 months.
That gave the bank confidence in the credit quality of its loan book, he said.
While the Reserve Bank had identified recent borrowers as the most at risk, Huggins said people who had borrowed recently were tested on their ability to service higher interest rates.
‘‘We’ve worked hard to support our customers to invest in their businesses, homes and futures. New Zealand’s resilience and success can be seen in our results,’’ he said.
He said the bank had also provided 7621 small and medium businesses with new loans, or more lending.
The country’s businesses had proven very resilient through the pandemic, he said. ‘‘One of the things we need to do is give businesses credit for the work they have done to retain jobs.’’
They were still facing supply chain, labour market and inflation challenges, although the borders reopening was welcome news for travel operators.
Huggins said BNZ still had confidence in the New Zealand economy and expected gross domestic product (GDP) growth, albeit not at the rates seen in the last 12 months.
Interest rates would continue to rise, he said, which would affect borrowers but could benefit savers. ‘‘On the positive side, the increasing cost of funds means that we are able to support savers. That’s really great ... customers relying on savings have been doing it tough.’’