BNZ Reports $1.5 Billion Profit, Faces Scrutiny Over Dairy Emissions Targets
Source: DairyNews.today
The Bank of New Zealand (BNZ) reported a profit after tax of $1.5 billion for the 12 months ending September 30, 2024, a slight decline of $3 million from the previous year. Despite growing its deposit base and lending activity, the bank faced narrower margins, higher costs, and a loss of income following the sale of its wealth business.
CEO Dan Huggins described the result as “solid,” noting that BNZ’s total lending increased by $4.3 billion, or 4.2%, with business lending rising by $2 billion (4.6%) and home lending up by $2.4 billion (4.1%). Customer deposits also grew by $3.8 billion, or 4.8%.
Huggins indicated some relief for homeowners struggling with high mortgage rates, highlighting that as inflation falls within the Reserve Bank’s target range and interest rates begin to decrease, many households and businesses will benefit. However, he acknowledged that the economic impact of monetary policy changes would take time to materialize and advised customers facing financial pressure to reach out to the bank for assistance.
Scrutiny from Lawmakers
Amid rising concerns over bank profits and lending practices, particularly in the agricultural sector, BNZ’s CEO is set to appear before a parliamentary banking inquiry on December 11. The bank has faced criticism for its lending practices, especially regarding support for productive industries such as farming.
Huggins was quick to defend BNZ’s position, noting that it was the largest lender to New Zealand’s productive sector in the 12 months to September 30, 2024, accounting for nearly half of the country's total business and agricultural lending growth.
Dairy Emissions Targets Raise Questions
However, Huggins may face tough questions regarding BNZ’s approach to emissions targets for dairy farmers, particularly in light of differing targets set by BNZ’s parent company, National Australia Bank (NAB). While BNZ has established emissions reduction goals for New Zealand dairy farmers, NAB’s recent climate disclosure revealed no such targets for Australian dairy farmers, sparking concerns over potential discrepancies between the two regions.
Huggins clarified that BNZ sets its own emissions targets independently from NAB. He emphasized that global market demands are driving the need for climate action in agriculture, with 80% of New Zealand's agricultural exports going to markets with mandatory or proposed climate disclosure schemes. He also pointed out that farmers, including major industry players like Fonterra, are responding to customer demand for sustainable practices.
Support for Māori Land Homeownership
In addition to addressing climate concerns, Huggins highlighted BNZ’s efforts to support homeownership for Māori communities. The bank has introduced a new funding model enabling iwi, Māori land trusts, and incorporations to secure home loans for properties on Māori land at standard interest rates. Huggins expressed pride in this initiative, which seeks to address housing challenges while respecting Māori cultural ties to their land.
Customer Satisfaction and Future Outlook
Despite ongoing challenges, BNZ has made strides in customer satisfaction. According to data from the bank, it is close to overtaking Kiwibank as the most liked major bank in New Zealand. However, Huggins acknowledged that more work was needed to win over business banking customers, as a higher percentage of business clients remained dissatisfied compared to those who were promoters of the bank.
Looking ahead, BNZ is focused on further developing its relationships with both individual and business customers, while continuing to navigate the complexities of New Zealand’s agricultural and housing sectors.
Huggins indicated some relief for homeowners struggling with high mortgage rates, highlighting that as inflation falls within the Reserve Bank’s target range and interest rates begin to decrease, many households and businesses will benefit. However, he acknowledged that the economic impact of monetary policy changes would take time to materialize and advised customers facing financial pressure to reach out to the bank for assistance.
Scrutiny from Lawmakers
Amid rising concerns over bank profits and lending practices, particularly in the agricultural sector, BNZ’s CEO is set to appear before a parliamentary banking inquiry on December 11. The bank has faced criticism for its lending practices, especially regarding support for productive industries such as farming.
Huggins was quick to defend BNZ’s position, noting that it was the largest lender to New Zealand’s productive sector in the 12 months to September 30, 2024, accounting for nearly half of the country's total business and agricultural lending growth.
Dairy Emissions Targets Raise Questions
However, Huggins may face tough questions regarding BNZ’s approach to emissions targets for dairy farmers, particularly in light of differing targets set by BNZ’s parent company, National Australia Bank (NAB). While BNZ has established emissions reduction goals for New Zealand dairy farmers, NAB’s recent climate disclosure revealed no such targets for Australian dairy farmers, sparking concerns over potential discrepancies between the two regions.
Huggins clarified that BNZ sets its own emissions targets independently from NAB. He emphasized that global market demands are driving the need for climate action in agriculture, with 80% of New Zealand's agricultural exports going to markets with mandatory or proposed climate disclosure schemes. He also pointed out that farmers, including major industry players like Fonterra, are responding to customer demand for sustainable practices.
Support for Māori Land Homeownership
In addition to addressing climate concerns, Huggins highlighted BNZ’s efforts to support homeownership for Māori communities. The bank has introduced a new funding model enabling iwi, Māori land trusts, and incorporations to secure home loans for properties on Māori land at standard interest rates. Huggins expressed pride in this initiative, which seeks to address housing challenges while respecting Māori cultural ties to their land.
Customer Satisfaction and Future Outlook
Despite ongoing challenges, BNZ has made strides in customer satisfaction. According to data from the bank, it is close to overtaking Kiwibank as the most liked major bank in New Zealand. However, Huggins acknowledged that more work was needed to win over business banking customers, as a higher percentage of business clients remained dissatisfied compared to those who were promoters of the bank.
Looking ahead, BNZ is focused on further developing its relationships with both individual and business customers, while continuing to navigate the complexities of New Zealand’s agricultural and housing sectors.
