- Bank of New Zealand’s net profit after tax declined 25% to $762 million for the year to 30 September as incomes dropped, expenses increased, and banks increased bad debts charges.
- Bank’s impairments rose by 163% to $300 million as it set out capital for possible potential loan defaults due COVID-19 induced economic fallout.
- BNZ’s Australia parent NAB also posted a 37% drop in cash profit to A$3.71 billion as bad debt provisions tripled to A$2.67 billion.
The Bank of New Zealand annual profit fell by 25% in NZ to $762 million for the year ended 30 September from $1.022 billion last year as incomes fell, expenses increased, and the bank braced up for increased impairments due to COVID-19.
The bank’s bad debt rose $186 million to $300 million as the bank put money aside for future loan defaults due to economic fallout because of COVID-19.
Angela Mentis BNZ Chief Executive stated that 2020 was a challenging year for the bank. BNZ has seen its customers reshaping how they work and live, and the bank’s home loan support has given confidence to many Kiwis in their financial position.
With increased digital and self-service options, cash and cheque transactions in branches have dropped by more than 50% while 80% of the transactions that were happening over the counter have shifted to ATMs.
Mentis stated that BNZ has given out more than $6 billion worth of home loan support for customers and $4 billion of support for business lending amid coronavirus.
BNZ parent NAB also reported a drop in its earnings
National Australia Bank Limited (ASX:NAB) reported a 37% fall in annual cash profit to A$3.71 billion as credit impairment charges of A$2.76 billion. NAB’s cash earnings fell 36.6% to A$3.71 billion while its net profit after tax stood at A$2.559 billion.
NAB will pay a final dividend of A30 cents per share, down from A83 cents per share in the same prior period. Total dividend for the year is A60 cents per share from A$1.66, which would be equivalent to 73% of cash profit.
Ross McEwan NAB Chief Executive stated that the operational climate of the bank has developed through the continuing difficulties and complexities connected to Covid-19.
He also added that even after disruption of the economic activity, the critical stimuli offered in the Federal Budget for households and enterprises, together with the anticipated full reopening of domestic state borders, provide a path for economic growth as funding support is lowered.
BNZ did not pay a dividend/distribution to NAB after Reserve Bank imposed an interim ban on payouts in April to aid financial stability in the time of economic instability induced by the coronavirus pandemic.
(NOTE: Currency is reported in NZ Dollar unless stated otherwise)