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BNZ reports steady profits despite slow economy

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  Published in Business and Finance on Wednesday, November 5th 2025 at 17:38 GMT by rnz

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Key figures from BNZ’s quarterly report

BNZ reported a net profit of NZ$128 million for the three‑month period ending 31 March, up 4 % on the same period a year earlier. The earnings were driven by a 2 % rise in income from interest and fees, offset by modest increases in operating expenses. Net interest margin, a key indicator of a bank’s ability to earn from its core lending activities, was 3.7 % and remained largely flat year‑on‑year. The bank’s cost‑to‑income ratio, a measure of efficiency, slipped to 57 % from 59 % in the previous year, reflecting a tighter focus on cost control.

Loan growth was modest but stable. The bank’s unsecured consumer loan book grew 1 % while secured loans such as mortgages and business loans increased by 3 %. The loan‑to‑deposit ratio stayed at 70 %, indicating that BNZ continues to maintain a healthy balance between its liquidity and its lending activities. Asset quality metrics, including the non‑performing loan ratio, remained low at 0.3 %, signalling that the bank’s credit underwriting processes are holding up well amid an uncertain economic backdrop.

BNZ’s earnings release also highlighted the bank’s strong position in the digital space. Net new digital accounts rose by 6 % and the bank reported that over 70 % of its retail clients now access at least one digital banking service. The bank’s chief executive, John Sullivan, said that digital growth is a “key pillar of our long‑term strategy,” and that it allows BNZ to serve customers more efficiently while keeping costs in check.

Context: a slowing economy and a resilient banking sector

The article points out that the New Zealand economy has been experiencing a slowdown. Data from Statistics New Zealand shows that gross domestic product (GDP) growth slowed to 0.2 % in the first quarter of 2024, the lowest growth rate since the 2009 global financial crisis. Inflation has also moderated, falling from a peak of 8.2 % in November 2023 to 4.8 % at the end of March. The Reserve Bank of New Zealand has responded by raising the official cash rate to 5.5 %, a level that keeps borrowing costs higher for households and businesses.

Despite this backdrop, BNZ’s profitability has remained relatively immune to the slowdown. The bank’s earnings report attributes this resilience to a combination of disciplined cost management and the fact that its loan portfolio is well‑diversified across residential, commercial and consumer segments. Moreover, BNZ’s exposure to the high‑growth retail and SME sectors has continued to generate steady fee income even as the broader economy lags.

In addition to BNZ’s own figures, the article includes a link to a recent statement from the Reserve Bank of New Zealand explaining the reasoning behind the latest rate hike. The statement emphasises the need to control inflation while supporting a stable financial system. The RNZ article also links to a commentary from the Australian and New Zealand Banking Association (ANZBA), which discusses how banks are adapting to a tougher economic environment through digital innovation, cost efficiencies and better risk‑taking practices.

Strategic priorities for the future

One of the most significant sections of the article covers BNZ’s strategic priorities. According to the bank’s CEO, the focus for the next 12 months will be on three main fronts:

1. Digital transformation – BNZ aims to make digital banking its default channel for all new accounts. The bank has already rolled out a new mobile app that incorporates AI‑driven financial advice, and it plans to partner with fintech firms to enhance its product offerings.

2. Cost optimisation – The bank will continue to pursue efficiencies in its operations, targeting a further 1 % reduction in the cost‑to‑income ratio. This includes streamlining branch networks and leveraging technology to automate routine tasks.

3. Risk‑adjusted growth – BNZ stresses that growth will come through a careful assessment of risk, especially in the consumer loan market. The bank is tightening underwriting standards for unsecured credit while maintaining its focus on providing access to finance for small‑businesses.

The article notes that BNZ has already taken steps towards these objectives, such as the recent announcement that it will reduce its branch footprint by 10 % by the end of 2025 and the launch of a new cloud‑based core banking platform that is expected to reduce transaction processing times by 20 %.

Broader implications for the New Zealand banking sector

The article links to an RNZ piece that analyses how BNZ’s steady earnings reflect wider trends in the New Zealand banking sector. The piece cites that other major banks – such as Westpac, ANZ and ASB – have reported similar patterns of modest growth coupled with strong risk‑management practices. The sector’s ability to maintain profitability in a slowing economy has reassured investors, and the Reserve Bank has praised the banking industry for its robust capital buffers and prudent lending policies.

The RNZ article also includes a link to a research brief from the New Zealand Institute for Economic Research, which argues that the country’s banking sector is well‑positioned to support the economy during the current slowdown, thanks in part to the high level of digital adoption and the resilient financial health of the banks.

Conclusion

In summary, BNZ’s latest earnings report demonstrates that the bank is able to generate steady profits even as the New Zealand economy slows down. The institution’s disciplined cost control, diversified loan portfolio, and growing digital capabilities have enabled it to stay resilient in a challenging environment. The bank’s strategic priorities – digital transformation, cost optimisation, and risk‑adjusted growth – are likely to keep BNZ well‑positioned in the next few years, while the broader banking sector appears to be maintaining its footing amid a cautious economic outlook.