Adviser's share of BNZ's new lending dipped in latest six months

BNZ's first-half results showed that advisers accounted for 46.8% of new lending in the six months, down from 48.1% in the six months ended September but up on the previous first-half's 43.8%.

Advisers accounted for 36.3% of BNZ's home loans at March 31, up from 34.8% at Sept 30 last year and from 30.7% in September 2022.

The percentage of interest-only mortgages rose to 18% of the portfolio, up from 17.7% at Sept 30 last year and from 17.5% at March 31 last year.

Mortgages that were 90-days past due rose to 0.24% of the portfolio from 0.17% at Sept 30 and 0.16% at March 31 last year while impaired mortgages rose to 0.09% from 0.02% at Sept 30 last year.

However, BNZ's charges against profit for bad debts fell to $71 million compared with $93 million at Sept 30 and $79 million at March 31, 2023.

Chief executive Dan Huggins said supporting customers “through these challenging times” is BNZ's top priority.

“Our teams continue to proactively contact customers who we have identified as potentially needing additional support. For customers feeling under pressure, our message is getting in touch,” Huggins said.

BNZ's net profit for the six months ended March 31 fell 5.3% to $762 million, largely because operating expenses jumped 11.1% to $641 million and net interest income fell marginally.

Net interest margin fell eight basis points to 2.37% compared with the same six months a year ago but was up one point from the 2.36% NIM in the September half year and well up on the 2.25% NIM in the six months ended Sept 30, 2022.

Huggins said the fall in NIM reflects “strong competition across the banking sector and a change in deposit mix as customers shifted funds into term deposits to take advantage of higher interest rates.”

BNZ's total new lending in the latest six months was up 2.4% to $2.4 billion with home lending up 1.9% to $1.1 billion and business lending up 3% to $1.3 billion. Deposits grew 1.9% or by $1.5 billion.

Mortgages now account for 56% of BNZ's lending. It's Australian parent, National Australia Bank, said in its presentation that the NZ bank is re-weighting “to less capital intense segments” and “increasing market share in underweight household segments.”

BNZ has a “strong focus on returns, given increased capital requirements from Reserve Bank of New Zealand capital changes.”

The big four NZ banks, including BNZ, have to lift their tier 1 capital to at least 16% of risk-weighted assets by June 30, 2028 from 8% previously.