By Gareth Vaughan
New Zealand's big four banks are even more profitable than their Australian parents, who've been anointed the developed world's most profitable by the Aussie media thanks to figures released by the Bank for International Settlements (BIS).
BIS, the central banks' bank, released its its annual report for the year to March 31, 2012 yesterday. It showed that, as measured by pre-tax profit as a percentage of total assets, the big Aussie banks pip Canada's as the developed world's most profitable. Their pre-tax profit as a percentage of total assets comes in at 1.19% (up from 1.14% the previous year), ahead of Canada's 1.08% at the top of a list of 13 countries. Third, at 0.93%, is the United States and last is Italy at -1.22%.
Interest.co.nz decided to break the New Zealand banks out from their Aussie parents and see where they placed. The average pre-tax profit as a percentage of total assets across New Zealand's big four - ANZ NZ, ASB, BNZ and Westpac NZ - came in at 1.39%, based on information contained in their general disclosure statements. That's 20 basis points higher than their Aussie parents.
All four New Zealand banks were ahead of their parents' combined average with BNZ at 1.52%, followed by ASB at 1.49%, ANZ at 1.35%, and Westpac at 1.20%.
Measured by net interest margins, the Basel, Switzerland-based BIS had the Australian banks fourth at 1.83% (down from 1.89% the previous year), behind Austria (2.56%), USA (2.49%) and Spain (2.38%). However, when we break out the New Zealand big four's net interest margins, Australia slips to fifth, with New Zealand fourth, a fraction below Spain at 2.37%.*
New Zealand's banks placed fifth lowest in terms of loan loss provisions at 0.15% of total assets. The addition of New Zealand sees Australia's banks slip to seventh given their 0.19% score.
In terms of operating costs as a percentage of total assets, New Zealand's banks were equal sixth lowest at 1.21% with Germany. The Aussies were fourth lowest at 1.17%.
BIS ranked each country based on its major banks. For Australia this included the big four - the ANZ Banking Group, ASB's parent Commonwealth Bank of Australia, BNZ's parent National Australia Bank, and the Westpac Group. For Austria and the Netherlands BIS included just two banks and for the USA nine. See more on the NZ banks in this half-year results wrap here.
According to BIS, in 2009 the Aussie banks were second most profitable, based on pre-tax profit as a percentage of total assets, at 0.93% behind Spain's 0.98%. They were also second, at 1.01% , in 2008, behind Spain's 1.07%.
*For this calculation we used ASB's 2011 calendar year figures.
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