Investors shrug off December concerns

Market update for the quarter ending 31 March 2019.

The world economy continues to grow but it is slowing and the ups and downs in financial markets have returned after a long period of low volatility.

Continue reading “Investors shrug off December concerns”

BNZ removes obstacles for New Zealanders to join KiwiSaver

New research from the forthcoming Bank of New Zealand (BNZ) Wellbeing Survey shows that not having enough savings for retirement is the biggest driver of financial anxiety for New Zealanders, with more than half concerned that we will not have enough to support ourselves in retirement.

This adds to recent reports showing the average KiwiSaver balance is too low at around $19,500, that we aren’t contributing enough, and that too many people are in the default conservative funds when they need to be in growth ones.

BNZ Chief Customer Officer Paul Carter, says, “Customers tell us they know they need to do something about their KiwiSaver, they just don’t know what, and they’re looking to their bank to help.”

“The onus is on financial institutions to do everything we can to remove obstacles, to make things simpler, and give people better tools and advice. That’s why we’re making major changes to our KiwiSaver offering,” said Mr Carter.

From 1 May 2019, BNZ has radically simplified and reduced its fees, removing the $1.95 monthly member fee – the first of the big four banks to make this move – and reducing management fees.

Table of fee changes

  Cash
Fund
First Home
Buyer Fund
Conservative
fund
Moderate
fund
Balanced
fund
Growth
fund
Before 13 May 0.30% 0.50% 0.58% 0.90% 1.00% 1.10%
From 13 May No change No change 0.50% 0.58% 0.58% 0.58%



“These changes remove important barriers to choosing the best fund for a customer’s needs, with the moderate, balanced, and growth funds now all on the same low fee. By this action, we’re removing fees as a consideration when deciding what fund to go into,” says Carter.

“These changes remove important barriers to choosing the best fund for a customer’s needs, with the moderate, balanced, and growth funds now all on the same low fee. By this action, we’re removing fees as a consideration when deciding what fund to go into,” says Carter.

Under the new structure, a person with $20,000 invested in the BNZ Growth fund would have their fees more than halved, from $243 to $116, which means more in their retirement nest-egg or helping them get into their first home faster.

Removing barriers is more than fees, it’s also about helping customers make good decisions about which fund to go into, Mr Carter said.

“We’ve re-written all of our disclosure documents and communications in plain English. We’re rolling out new tools for our bankers to help them have better conversations with customers and help them pick the right fund for their needs. We’re also putting more tools in the hands of customers, with calculators to help compare the different funds and returns over time.

“Joining and managing KiwiSaver needs to be as easy as possible, and existing customers can join online or via their BNZ app in less than a minute. Making additional contributions is easy and can also be done online or on the app, and you can change your fund type online too. We’re continuing to work on new digital tools to bring new features to our customers too,” says Carter.

BNZ is also changing the way the underlying investments are managed, shifting to an index management approach for international assets, while keeping the actively managed approach for Australasian investments.

What the BNZ Wellbeing survey found:

  • 55% of all New Zealanders think they won’t have enough to retire on
  • 30-49-year olds who are the most pessimistic about having enough, with 63% expecting to fall short
  • The number of people in the highest income group who said they would fall short was about the same as that in the lowest income group.

The full BNZ Wellbeing Survey results, a sample of 1000 New Zealanders asking them about their financial wellbeing, will be available in the next few weeks.

BNZ removes obstacles for New Zealanders to join KiwiSaver


New research from the forthcoming Bank of New Zealand (BNZ) Wellbeing Survey shows that not having enough savings for retirement is the biggest driver of financial anxiety for New Zealanders, with more than half concerned that we will not have enough to support ourselves in retirement.

This adds to recent reports showing the average KiwiSaver balance is too low at around $19,500, that we aren’t contributing enough, and that too many people are in the default conservative funds when they need to be in growth ones.

BNZ Chief Customer Officer Paul Carter, says, “Customers tell us they know they need to do something about their KiwiSaver, they just don’t know what, and they’re looking to their bank to help.”

“The onus is on financial institutions to do everything we can to remove obstacles, to make things simpler, and give people better tools and advice. That’s why we’re making major changes to our KiwiSaver offering,” said Mr Carter.

From 1 May 2019, BNZ has radically simplified and reduced its fees, removing the $1.95 monthly member fee – the first of the big four banks to make this move – and reducing management fees.

Table of fee changes
 CASH FUNDFIRST HOME BUYER FUNDCONSERVATIVE FUNDMODERATE FUNDBALANCED FUNDGROWTH FUND
Before 13 May0.30%0.50%0.58%0.90%1.00%1.10%
From 13 MayNo changeNo change0.50%0.58%0.58%0.58%

“These changes remove important barriers to choosing the best fund for a customer’s needs, with the moderate, balanced, and growth funds now all on the same low fee. By this action, we’re removing fees as a consideration when deciding what fund to go into,” says Carter.

Under the new structure, a person with $20,000 invested in the BNZ Growth fund would have their fees more than halved, from $243 to $116, which means more in their retirement nest-egg or helping them get into their first home faster.

Removing barriers is more than fees, it’s also about helping customers make good decisions about which fund to go into, Mr Carter said.

“We’ve re-written all of our disclosure documents and communications in plain English. We’re rolling out new tools for our bankers to help them have better conversations with customers and help them pick the right fund for their needs. We’re also putting more tools in the hands of customers, with calculators to help compare the different funds and returns over time.

“Joining and managing KiwiSaver needs to be as easy as possible, and existing customers can join online or via their BNZ app in less than a minute. Making additional contributions is easy and can also be done online or on the app, and you can change your fund type online too. We’re continuing to work on new digital tools to bring new features to our customers too,” says Carter.

BNZ is also changing the way the underlying investments are managed, shifting to an index management approach for international assets, while keeping the actively managed approach for Australasian investments.

What the BNZ Wellbeing survey found:

  • 55% of all New Zealanders think they won’t have enough to retire on
  • 30-49-year olds who are the most pessimistic about having enough, with 63% expecting to fall short
  • The number of people in the highest income group who said they would fall short was about the same as that in the lowest income group.

The full BNZ Wellbeing Survey results, a sample of 1000 New Zealanders asking them about their financial wellbeing, will be available in the next few weeks.

Customer and community focus delivering strong momentum for BNZ – HY19 Results

Bank of New Zealand’s (BNZ) increased focus on customers and communities has underpinned a strong result for the first half of the 2019 financial year.

“The first six months have been all about enabling our people to deliver the basics brilliantly for BNZ customers, backing our regions, and supporting at-risk communities across New Zealand. We have purposefully realigned the business to deliver improved customer outcomes, and we’re encouraged by our progress to date and excited about the future,” says BNZ CEO Angie Mentis.

BNZ has announced a statutory net profit1 for its BNZ Banking Group2 of $550 million for the six months ended 31 March 2019, with operating revenue3 increasing by 9.0% over the prior comparable period.

Operating revenue growth was supported by strong housing and business loan growth and improved net interest margin. Statutory net profit was impacted by the gain on the sale of BNZ’s 25% shareholding in Paymark and unfavourable mark to market movements on offshore debt instruments. “This performance demonstrates we’re on track to deliver on our key strategic themes for 2019 and beyond,” says Ms Mentis.

Announcing BNZ’s results today, Ms Mentis updated progress on those themes:

  • BNZ has supported the regions with $800 million in new lending to businesses in the regions ($10 billion available over five years)
  • Driving innovation and simplification of BNZ products and making it easier to do business with us by creating simpler ways to open accounts and delivering products that meet the needs of our customers
  • Continued commitment to improving financial wellbeing with 55,000 New Zealanders having a financial health check with BNZ in the past six months

Backing the regions

“We remain committed to supporting businesses and this half of the financial year, we’ve helped 8,800 small and medium enterprises to start or grow their businesses wherever they are based, creating meaningful opportunities right across New Zealand”, says Ms Mentis.

With $10 billion available over five years, BNZ has supported the regions with $800 million in new lending so far this financial year.

BNZ is also launching the first of a range of initiatives to find new ways of personalising banking, especially in the regions.

“The first Mobile BNZ will visit towns across the Manawatu-Wanganui region in June 2019. BNZ customers there can meet a banker in person without having to drive to Palmerston North. We’re starting in Pahiatua, Marton and Foxton with other towns to follow,” says Ms Mentis.

In addition to this new initiative, BNZ’s commitment made in November 2018 to maintaining its 153 branch network stands.

Supporting at-risk communities

“We’re continuing to work hard to support our communities,” says Ms Mentis. “Being an active part of so many New Zealand communities gives BNZ the opportunity to help customers plan for the future and offer increased financial security for those most in need,” says Ms Mentis.

“For us, taking an active part in communities also means making a difference where it’s needed most. We’ve partnered with The Salvation Army to establish ‘The Good Shop’ which aims to support communities with high quality goods and services at fair prices directly to their homes. At the same time, we’re also able to undermine the business models of lenders who take advantage of some of our most vulnerable communities.”

“We’re ramping up our Community Finance programme with Good Shepherd that offers zero and low interest loans by doubling the number of Good Shepherd loan workers in communities where they are most needed,” says Ms Mentis. “We’ve already had nearly 5,000 conversations since Community Finance launched four years ago and helped more than 1,400 customers with nearly $4 million in lending.”

“As we come into winter we’re also providing a $1 million interest free credit line to help Habitat for Humanity to carry out more urgent repairs and alterations for low-income homeowners throughout the North Island. This means that more of the great work Habitat for Humanity does can be fast tracked to help ensure people in need can stay in their homes with the support they require,” says Ms Mentis.

Continued customer focus

Our customers want banking to be easy and we have continued our focus on reducing the number of products and simplifying fees.

BNZ recently provided a comprehensive response to the Financial Markets Authority and Reserve Bank of New Zealand’s review of conduct and culture in the New Zealand banking industry.

“Our response highlighted BNZ’s focus and resolve on conduct to do the best we can for our customers and outlines our plan to meet the increasing expectations of our customers and stakeholders.”

“Proactively fixing issues where we find them is key to delivering great customer outcomes, and continuing to listen and proactively support New Zealanders is the right thing for BNZ to do,” says Ms Mentis.

Helping New Zealanders achieve their home ownership goals

In the first half of this financial year, BNZ has increased its share of the housing loan market by 1.2x the market growth rate and helped more than 7,500 New Zealanders realise their home ownership goals, with 2,500 of those being first home buyers.

“Our housing loan growth was particularly pleasing as we know home ownership plays a key role in New Zealanders’ sense of on-going financial wellbeing and people are looking to BNZ to help take this important step,” says Ms Mentis.

“BNZ is also expanding the options available for first home buyers to get into the market with the introduction of a shared-ownership pilot programme,” says Ms Mentis.

Fast + Simple = Better banking 

“We’re accelerating our drive to deliver a fast and simple banking experience for our customers.

Our “Anywhere Sign-Up” launch is proof of that with around 10% of new account openings using the selfie sign-up function. With our new online pin set-up, we have improved the self-service experience to join BNZ. These are just the sort of banking experiences customers expect when choosing who they give their business to.

There is more innovation in BNZ’s digital pipeline to come, all aimed at enhancing our customers’ experience,” says Ms Mentis.


Key financial results

(compared to the six months ended 31 March 2018, unless otherwise stated)

BNZ Banking Group2

  • Statutory net profit1 of $550 million, an increase of 12.2%, impacted by:
    • Higher cash earnings in BNZ Banking Group
    • The gain on sale of BNZ’s 25% shareholding in Paymark in January 2019
    • Unfavourable mark to market movements on offshore debt instruments
  • Operating revenue3 increased by 9.0% to $1,278 million (excluding gains less losses on financial instruments)

NAB NZ Banking Reporting Segment4

  • Cash earnings5 of $532 million, an increase of 7.7%
  • Net operating income increased 5.5% to $1,258 million, driven by strong volume growth in housing, business lending and deposits, and supported by improved net interest margin
  • Net interest margin increased 6 basis points to 2.30% due to improved funding composition, partially offset by lower lending margins
  • Gross loans and acceptances increased by 6.4% to $84.9 billion driven by housing and business lending
  • Customer deposits increased by 2.6% to $59.7 billion
  • Credit impairment charge increased by $3 million to $44 million
  • Operating expenses increased by 2.2% to $475 million

  1. Statutory net profit has been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (“NZ GAAP”). It complies with New Zealand equivalents to International Financial Reporting Standards (“NZ IFRS”) and other applicable Financial Reporting Standards.
  2. BNZ Banking Group excludes the Insurance operation in New Zealand and includes BNZ’s Group Capital Management, BNZ’s Markets Trading operations and other central units.
  3. Operating revenue excluding gains less losses on financial instruments.
  4. NAB NZ Banking Reporting segment comprises the Consumer, Wealth, Business, Agribusiness, Corporate, Insurance and Market Sales operations in New Zealand, operating under the ‘BNZ brand’. It excludes BNZ’s Group Capital Management, BNZ’s Markets Trading operations and other central units.
  5. Cash earnings is a non-IFRS key financial performance measure used by BNZ for its internal management reporting as it better reflects what BNZ considers to be underlying performance. Cash earnings is calculated by excluding fair value movements and hedging gains/(losses) as they introduce volatility and/or distortion within the statutory net profit which is income neutral over the full term of transactions. A reconciliation of cash earnings to statutory net profit is included on the final page. Cash earnings is not a statutory financial measure, is not presented in accordance with NZ GAAP and is not audited or reviewed in accordance with International Standards on Auditing (New Zealand).

Bank of New Zealand Financial Results – HY19 

Read the full document:

Bank of New Zealand Financial Results – HY19 PDF 412KB