Record BNZ profit

Press, 16 July 1986, Page 33

Record BNZ profit

By SIMON LOUISSON in Wellingon

The Bank of New Zealand has reported a record after tax profit of $100.6 million, which should ensure the success of its forthcoming share issue.

The profit is 34.14 per cent up on 1985 and has allowed it to increase its dividend to Government by 33 per cent at $2O million.

The bank has again had to retain 83 per cent of its profits so that it can keep its debt/equity ratio in line with international standards. The ratio now stands at 25:1 and will be lowered to 20:1 through the sale of $l5O million of shares to the public. This will allow the Government, as principal share-

holder, to retain a far higher proportion of profit next year. The bank managed to increase its return on shareholders’ funds from 23.6 per cent to 25.3 per cent, indicating that efficiency has improved as well as profitability. The trend has been steadily upward since 1981 when it was 18.3 per cent. Net trading income increased from $420.9 million to $579.9 million, and operating expenses increased $93.7 million to $371.9 million.

Taxes increased by 59.4 per cent to $105.7 million.

Figures released by the bank show that its market share of trading bank activity has increased from an already high figure.

The BNZ now has 41.6 per cent of deposits, followed by ANZ with 21.2, Westpac with 20.9 and National with 16.2 per cent.

Chief executive, Mr Bob McCay, said the increase has come about by improving its services to customers through such instruments as the BNZ Life Insurance, Ltd. Mr McCay highlighted four reasons for the increased profits: • Deregulation opening up new business opportunities.

• Strong demand for a wider range of services. • Increased activity in foreign exchange markets.

• A rise in offshore business. Chairman Sir Lewis

Ross commented that not only has the bank grown in size, but it has grown in stature and continues to earn top ratings from the major U.S. credit-rating agencies. Mr McCay said the bank is strategically prepared for the arrival of foreign banks, and any further changes in the finance sector. Overseas assets now make up around one third of the bank’s assets. Plans have been laid to expand the bank’s network beyond Australia, Fiji, Hong Kong and the U.S.

McCay was particularly pleased with the bank’s progress in Australia, where business had increased in a very competitive environment.