NZ bank’s profit goes straight to Australia
(13 February 2012 – New Zealand) Most of the combined profits of NZ$3 billion (A$2.8 billion) of New Zealand’s big five banks headed to Australian bank coffers.
Bank profits were up 18 percent year on year and 26 percent higher in the second half of the year than the first according to PricewaterhouseCoopers.
While the four Australian-owned banks – ANZ National, BNZ, ASB and Westpac – all boosted their profits in the latest half-year from the same period in 2010, Kiwibank did not.
The overall growth came from increasing interest income, growth in other operating income, and a modest reduction in operating expenses, the report said.
The banks had been sourcing funds on the cheap after falling interest rates slashed borrowing costs. They had also been able to mostly self-finance since the second half of 2009, which provided some insulation from turbulence overseas.
The average net interest margin, the difference between borrowing and lending rates, rose four basis points to 2.27 percent in the second half of 2011.
Most of the NZ$3 billion profits would return overseas to the banks' parent companies, with some kept in New Zealand for capital spending.
The fastest-rising expense for banks was the amount of tax paid, up 47 percent from the 2010 year to NZ$1.3 billion. The increase was partly down to increased revenue, but also related to a major 2009 tax settlement with the IRD which affected several banks.
The final settlement was reduced from NZ$2.7 billion to NZ$2.2 billion, which left a surplus for the 2010 year and artificially reduced the level of tax paid.
Bad debt charges also rose to NZ$379 million in the second half of 2011, up from NZ$355 million in the first half, with both periods hit by the credit provisioning impact of the Christchurch earthquakes.
While the four Australian-owned banks – ANZ National, BNZ, ASB and Westpac – all boosted their profits in the latest half-year from the same period in 2010, Kiwibank did not.
The overall growth came from increasing interest income, growth in other operating income, and a modest reduction in operating expenses, the report said.
The banks had been sourcing funds on the cheap after falling interest rates slashed borrowing costs. They had also been able to mostly self-finance since the second half of 2009, which provided some insulation from turbulence overseas.
The average net interest margin, the difference between borrowing and lending rates, rose four basis points to 2.27 percent in the second half of 2011.
Most of the NZ$3 billion profits would return overseas to the banks' parent companies, with some kept in New Zealand for capital spending.
The fastest-rising expense for banks was the amount of tax paid, up 47 percent from the 2010 year to NZ$1.3 billion. The increase was partly down to increased revenue, but also related to a major 2009 tax settlement with the IRD which affected several banks.
The final settlement was reduced from NZ$2.7 billion to NZ$2.2 billion, which left a surplus for the 2010 year and artificially reduced the level of tax paid.
Bad debt charges also rose to NZ$379 million in the second half of 2011, up from NZ$355 million in the first half, with both periods hit by the credit provisioning impact of the Christchurch earthquakes.
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