By Gareth Vaughan
Rural lender Rabobank New Zealand has posted a 48% rise in March quarter profit with operating income rising at almost twice the rate of expenses.
Rabobank's General Disclosure Statement for the three months to March 31 shows unaudited profit after tax up NZ$6.4 million, or 48%, to NZ$19.66 million from NZ$13.3 million in the same period of 2011.
The bank's total net operating income increased NZ$13.62 million, or 32%, to $NZ56.6 million, while its operating expenses rose NZ$3.4 million, or 17%, to $NZ23 million.
Net interest income rose NZ$6.8 million, or 14%, to $NZ56.2 million. However, impairment losses on loans were also on the rise, up NZ$1.3 million, or 27%, to NZ$6.3 million. Releasing its annual results in March Rabobank said it was "carefully monitoring" the "particular challenges" being faced by the kiwifruit and wine sectors, but remained committed to both over the long-term.
Individually impaired assets were down NZ$4.18 million over the March quarter to NZ$391.490 million, with loans at least 90 days past due - but not impaired - up NZ$4.4 million to NZ$69 million.
Over the quarter gross loans and advances rose NZ$63.435 million to NZ$7.956 billion. Total assets increased about NZ$66 million to NZ$7.932 billion, with total liabilities up about NZ$46 million to NZ$7.220 billion. Total deposits, including those with Rabobank's online unit RaboDirect, fell NZ$103.7 million to NZ$2.861 billion with both call deposits and term deposits down.
Total equity rose NZ$19.6 million to NZ$711.954 million. However, Rabobank's tier one capital ratio - shareholders' funds in the bank - was 7.31% at March 31, down from 7.75% at December 31, 2011, with its total capital ratio down to 10.95% from 11.25%.
The Reserve Bank recently pointed out that some banks will need to raise new regulatory capital to comply with the global Basel III capital adequacy standards, with Rabobank potentially among them.
Under the Reserve Bank's Basel III proposals the standard tier one capital ratio rises to 6% from 2014, from when the prudential regulator also plans to introduce a 2.5% "conservation buffer" to ensure banks maintain a buffer of capital over the minimum ratio requirements that can be used to absorb losses in times of financial and economic stress. This will take the tier one capital ratio to 8.5% and total capital ratio to 10.5%.
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