WELLINGTON: New Zealand’s biggest five banks made a net profit of $1.69 billion in the three months to June 30, almost unchanged from the previous quarter. Banks’ bad debts are falling despite challenging economic conditions, suggesting they may be “taking their medicine quickly”.
PWC analysis found the five major banks – ANZ, ASB, BNZ, Kiwibank and Westpac – made a net profit of $1.69 billion in the three months to June 30. That figure was almost unchanged from the first quarter of the year, with the fall in bad debts making up for higher expenses.
Bad debts fell to $73 million from $100m in the first quarter, despite challenges including weak dairy prices and falling business confidence. Banks set aside money to cover any debts that are turning sour, and can later add the provisions back onto their books if the loans recover. PWC banking and capital markets leader Sam Shuttleworth said the falling New Zealand dollar may have provided some relief to exporters.
The banks’ net interest income increased, mostly driven by an increase in gross lending of $7.4b. Net interest margins, which are the premiums added to the cost of borrowing, were flat at 2.26 per cent.
Shuttleworth said mortgage lending was highly competitive, with rates below 5 per cent and borrowers still shifting into less profitable fixed home loans. Total lending growth for the second quarter was 2.27 per cent. That was up from the previous quarter’s 1.9 per cent, and higher than any quarter during 2014.
