The Bank of New Zealand has posted a 13 percent rise in profits on the back of growth in lending but warned that challenging times are ahead.
BNZ's cash profit, which strips out one off items, was $813m compared with $675m the year before.
Chief executive Dan Huggins said an 18 percent rise in revenue was offset by a similar sized rise in its expenses and a near four-fold increase in the amount put aside for bad debts.
Key numbers for the six months ended March compared with a year ago:
- Net profit $805m vs $709m
- Net interest income $1.46b vs $1.16b
- Loans $101b vs $97.8b
- Deposits $75b vs $74b
- Impairments $79m vs $21m
- Net interest margin 2.45 basis points vs 2.04 bps
The bank, owned by Australia's NAB, had a 3 percent lift in lending driven by mortgage demand, and its net interest income - the difference between what it borrows and what it lends at - grew nearly 26 percent, while there was also a strong rise in its net interest margins.
Huggins said customers were feeling the pinch from inflation and higher interest payments.
"While we're confident that our home loan customers are able to manage the current higher interest rate environment, for some, it will be challenging."
He said the bank was expecting a recession, which would inevitably affect lending growth and pressure customers.
"It won't be a typical recession, unemployment won't get very high, balance sheets are strong, and the financial sector is well positioned so it will be challenging for New Zealand for our customers, but manageable."
He said the bank was ready to help and advised customers in trouble to get in touch.
Huggins said the BNZ had moved to assist those affected by the recent storms and floods and to date had waived $22m in interest payments, and a simplifying of BNZ's systems had resulted in $15m of savings, which it had returned to customers through cutting or scrapping certain fees.
He pushed back against accusations the banks have been earning excessive profits and should be subject to an inquiry.
"The industry is very, very competitive ... the industry is already highly regulated and when we look at the returns on the basis of equity or assets they aren't excessive compared to those on the NZX or peers globally.
"We'll co-operate with any inquiry that's ordered, but we don't think one is justified."