BNZ profits rise 12.1%, but overdue loans rising

BNZ has reported a 12.1% rise in cash profits for the financial year to September 30 to NZ$482 million as tight cost control and productivity enhancements more than offset a slight rise in provisions for bad debts. But signs are emerging that the economic slowdown and stress on disposable incomes is forcing some mortage borrowers to miss their payments.  The value of loans where payments were more than 90 days past due rose to NZ$94 million at the end of September from NZ$52 million a year ago, although the figure is unchanged from the end of March. As a proportion of total assets, this represents 0.20%, which is up from 0.13% a year ago, but down from 0.22% at the end of March. BNZ's bad and doubtful debts charge as a percentage of credit risk weighted assets rose to 0.29% from 0.15% a year ago and 0.16% in March as BNZ increased its impaired assets charge to 0.34% of total loans from 0.10% in March. BNZ's bad debt charge rose to NZ$67 million from NZ$52 million a year ago. BNZ said it was comfortable with the credit quality of its loans. Here's what it said in the detail of its regional commentary of the National Australia Bank result.

"Given the increase in 90+DPD (Days past due) and impaired assets is within the secured portfolio, the NZ Region is not expecting any significant increases in net write-offs for the 2009 financial year. The NZ Region's historically conservative approach to lending has ensured it is well placed in the current market environment The region has conducted several reviews across its portfolio and remains comfortable with the credit quality of these assets."