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BNZ first-half earnings rise 9pc

NZN 4/05/2017 Paul McBeth

Bank of New Zealand lifted first-half earnings 9 per cent as the local subsidiary of National Australia Bank benefited from a smaller bill for bad debts.

This came as a recovery in global dairy prices alleviated stress on farmers' balance sheets, offsetting skinnier lending margins for financiers.

Cash earnings, the preferred measure of the Australian-owned banks, rose to $484 million in the six months ended March 31 from $444m a year earlier.

That was largely due to a 46 per cent drop in the bank's impairment losses on bad debt to $43m.

Net profit fell 7.8 per cent to $416m, with BNZ wearing a $95m unrealised loss in the fair value of its international debt instruments.

The lender's cost to income ratio rose to 42.49 per cent from 38.37 per cent a year earlier, as its operating expenses rose 5.4 per cent to $458m with the bank making greater use of mortgage brokers.

BNZ has been investing in digital platforms to shift more transactions online, letting it scale back opening hours and the number of more expensive physical branches.

The bank had 161 retail branches as at March 31, down from 173 a year earlier. It had 488 automatic teller machines compared to 479 ATMs, and 745,000 internet banking customers, up from 705,000 in March 2016.

"As we simplify and deliver better customer experiences that are faster and more efficient, we are automating and digitising things that are currently manual and don't need to be," BNZ chief executive Anthony Healy said in a statement.

"These initiatives will mean fewer people in parts of our business as well as growth of investment in areas of our business that didn't exist 10 years ago, or indeed, even today."

The lender had 4788 full-time equivalent staff as at March 31, down from 5012 a year earlier.

BNZ's loan book grew 7.2 per cent to $76.2 billion, a slower pace than the 8.6 per cent increase in deposits to $53b.

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