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Bank punished for missed earnings target

NZ NewswireNZ Newswire 2/05/2016 Jonathan Underhill

Bank punished for missed earnings target © David Gray / Reuters Bank punished for missed earnings target New Zealand shares fell after Westpac posted earnings that missed estimates on increased impairments. ANZ, which also reports this week, and Kathmandu Holdings were among leading decliners.

The S&P/NZX 50 Index fell 28.76 points, or 0.4 per cent, to 6,791.82. Within the index, 31 stocks fell, 14 rose and four were unchanged. Turnover was $122 million.

Westpac dropped 5 per cent to $32.34 and ANZ Bank fell 4.2 per cent to $25.53 on the NZX, pacing declines on the S&P/ASX 200 Index.

Westpac posted first-half cash profit, which excludes one-time items, of $A3.9 billion ($NZ4.25b). While that was up from A$3.78b a year earlier it missed analyst estimates as the charge for bad debts surged to $A667 million ($NZ726.07m), a six-year high.

"Yes it did miss (estimates) but not by a huge amount," said David Price, a broker at Forsyth Barr. "The Australian market is fairly brutal when companies don't make forecast."

Kathmandu fell 1.9 per cent to $1.56.

Meridian Energy fell 3.6 per cent to $2.555, leading declines among utility stocks, Mighty River Power fell about 3 per cent to $2.93. TrustPower fell 1.3 per cent to $7.65, Vector dropped 1.2 per cent to $3.31 and Contact Energy fell 0.2 per cent to $5.07.

Z Energy, which last week got antitrust approval to buy rival petrol station chains, rose 0.5 per cent to $7.88.

Fonterra Shareholders' Fund rose 0.3 per cent to $5.83. This week's GlobalDairyTrade auction is expected to record another small gain in prices of dairy products.

Among other large-cap companies, retirement village operator Summerset Group fell 1.8 per cent to $4.36 and retailer Warehouse Group declined 1.5 per cent to $2.72. Xero, the cloud-based accounting service, fell 1.2 per cent to $16.20 and A2 Milk fell 1.1 per cent to $1.75.

Price said there has been "indiscriminate buying from offshore" of New Zealand's biggest listed companies and Monday's selloff was just as widespread.

Investors were also conscious of the kiwi dollar having gained back up to 70 US cents, creating an extra drag for exporters and companies getting much of their revenue offshore. Fishers & Paykel Healthcare fell 0.3 per cent to $9.12.

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