Kiwi enterprise and endeavour at heart of solid result for BNZ – FY19 Results

Bank of New Zealand (BNZ) today released its full year results to 30 September 2019 (FY19) and says its solid performance is a result of helping more New Zealanders buy homes and supporting growing Kiwi businesses. 

BNZ announced its statutory net profit decreased by $7 million or (0.7%) to $1,022 million. This was impacted by a number of specific one-off items, including a reduction in BNZ’s capitalised software balances due to a review of software capitalisation policies, which was partially offset by a gain on the sale of BNZ’s 25% shareholding in Paymark Limited and a settlement in relation to the earthquake damage to BNZ’s premises in Wellington. Excluding specific one-off items, statutory net profit increased by $23 million or 2.2%.

BNZ CEO Angie Mentis says, “Our results tell a story of Kiwi enterprise and endeavour. 

“BNZ’s focus on helping New Zealanders be good with money so they can do great things with it has seen growth in lending across business and consumer portfolios. This is supported by our continued emphasis on simplifying our products, improving our systems and fixing issues when we find them.”

BNZ helped more than 5,000 New Zealanders into their first home, a 25% increase on last year.  

Business investment levels were also cause for optimism with new or increased lending issued to more than 16,000 small and medium businesses across New Zealand during the year. 

Investing in communities 

Ms Mentis says, “BNZ wants to see New Zealand’s towns and communities flourish and is committed to backing local businesses.

“Last year, we made available $10 billion of lending over five years to small and medium enterprises outside of New Zealand’s main centres and we know it is being put to good use across the country.”

In addition to committing to no regional branch closures until at least 2022, BNZ launched its first mobile branch covering Foxton, Martin, Ōtaki and Pahiatua in the Manawatu-Whanganui region.  

Since launching in June 2019, the Mobile BNZ has covered 8,500 kilometres, the equivalent of travelling the length of New Zealand five times and has facilitated more than 600 conversations with customers who previously had no convenient branch to visit. Based on this positive response its availability will be extended to more regions next year. 

Delivering financial wellbeing for customers 

Ms Mentis says, “We are removing barriers, taking the complexity out of banking, investing in technology and accelerating digital solutions. We’re committed to being digital first and offering personal support when it matters most to our customers.”

In FY19, BNZ completed nearly 108,000 financial health checks, helping customers assess and plan their financial futures. BNZ’s enhanced KiwiSaver offering also experienced 15% year-on-year growth in customers and a 32% increase in funds under management.

Ms Mentis says, “This year we helped our customers save for their future by revamping our KiwiSaver offering by cutting fees, changing fund management, simplifying language and developing new tools to help customers choose the right fund for their needs.”

During FY19 BNZ also cut 36 products from its range, removed overseas ATM fees and helped more customers to be digital first, reducing 2.8 million pieces of paper from its processes. 

Helping New Zealanders when it matters most 

Ms Mentis says, “We are on a mission to disrupt predatory lending and this year celebrated five years of providing Community Finance loans. Our no and low interest loans are now available across 34 locations in New Zealand.” 

Together with Good Shepherd NZ, BNZ’s Community Finance in the last five years has helped more than 1,900 families get access to $5.16 million in no and low interest lending. 

BNZ is also taking aim at predatory traders offering products at extortionate prices. In partnership with The Salvation Army, BNZ now has two ‘The Good Shop’ trucks, operating in Porirua and Manurewa, offering high-quality household goods at fair prices and available on no and low interest loans.

Over the course of a week in August, BNZ staff conducted ‘Scam Savvy’ sessions around the country, helping more than 55,000 people be safer online and avoid being scammed.  

Focus on BNZ people

Ms Mentis says BNZ announced to its employees yesterday that all employees will receive six weeks’ annual leave from 1 January next year – an increase from four weeks.  

She says, “We want to support our people to do their best work for our customers. More leave, extended parental leave as well as flexibility in how and where our people work, is in keeping with our focus on wellbeing. It means our people can work in a way that best suits them and we can empower them to grow and lead more balanced lives,” says Ms Mentis. 

Awards

• Canstar Digital Bank of the year – 2^nd year in a row
• Canstar Small business bank of the year
• Canstar Outstanding value business credit card
• Canstar Bank of the Year for credit cards
• Canstar KiwiSaver Outstanding Value Provider Award

Key Financial Results 

*Note: compared to the 12 months ended 30 September 2018, unless otherwise stated. 

BNZ Banking Group² 

• Statutory net profit¹ of $1,022 million, decreased by 0.7%. This was impacted by the reduction in capitalised software balances, which was partially offset by:
  • The gain on sale of BNZ’s 25% shareholding in Paymark Limited in January 2019 
  • The settlement in relation to the earthquake damage to BNZ’s premises in Wellington 
• Strong volume performance in housing and other areas of the business  
• Operating revenue³increased by 6.8% to $2,527 million (excluding gains less losses on financial instruments)  

NAB NZ Banking Reporting Segment⁴ 

• Cash earnings⁵ of $1,055 million, increased by 5.1% 
• Net operating income increased by 5.1% to $2,537 million, driven by strong lending growth and improvements in other operating income 
• Net interest margin declined 2 basis points to 2.25% due to the impact of the lower rate environment 
• Gross loans and acceptances increased 5.6% to $87.2 billion driven by home and business loans 
• Customer deposits increased by 5.1% to $61.5 billion 
• Credit impairment charge increased by $34 million to $110 million, driven by an increase in specific provisions relating to a small number of large corporate dairy exposures 
• Operating expenses increased by 1.8% to $963 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).  

1. 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. 
2. 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. 
3. 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 Markets Trading operations and other central units. 
4. Unrealised fair value gains or losses on economic hedges that do not qualify for hedge accounting and hedge ineffectiveness causes volatility in statutory profit, which is excluded form cash earnings as it is income neutral over the full term of transactions. This arises from fair value movements relating to trading derivatives for risk management purposes; fair value movements relating to assets; liabilities and derivatives designated in hedge relationships; and fair value movements relating to asset and liabilities designated at fair value. 
5. Specific one-off items after tax includes a reduction in capitalised software balances, the gain on sale BNZ’s 25% shareholding in Paymark Limited, and the settlement in relation to the earthquake damage to BNZ’s premises in Wellington. 
6. Spot volumes (unless otherwise stated) and performance measures are based on NAB NZ Banking Reporting segment operations. Performance measures are calculated on a cash earnings basis.