KPMG - FIPS December 2014 quarterly bank results

KPMG - FIPS December 2014 quarterly bank results

Bank profits fall for the December 2014 quarter

The banking sector has recorded an overall drop in net profit after tax (NPAT) for the December 2014 quarter of $1,151 million. Down from the record September 2014 quarter NPAT of $1,254 million.

Across the sector, five of the nine participants actually recorded growth in NPAT with the overall decrease primarily attributed to the 9.2% and 7.9% fall in NPAT recorded by the country’s largest and third largest banks, ANZ Bank and BNZ respectively, mainly due to the decrease in this quarter of their non-interest income caused by unfavourable movements of hedging activities and financial instruments compared to the September 2014 quarter.

John Kensington, KPMG Head of Financial Services, says, “The New Zealand banking sector continues to maintain a strong position and with comparably favourable economic conditions, low unemployment, and a stable interest rate environment, it is in all likelihood that this position will be maintained for the near future.”

The drop in profits also comes against a background of intense competition for lending, an end to the release or reduction of provisioning and also demonstrates the volatility of the valuation of fair value through the profit or loss instruments.

Total assets have continued to grow to new record high levels of $402 billion across the sector, a $3 billion increase or 0.76% improvement on the September 2014 quarter. The continued confidence in the New Zealand economy and the strengthening housing sector have contributed to this, but it’s worth noting that with the effects of the global financial crisis (GFC) wearing off, total assets across the sector have increased every quarter since September 2013 with no signs of slowing down as favourable economic conditions prevail.

Key findings from the KPMG FIPS December 2014 quarterly include;

• Net profit after tax (NPAT) $1,151 million, down $103 million from the September 2014 quarter

• ANZ Bank NPAT down 9.2%

• BNZ NPAT down 7.9%

• Total asset growth up 0.76% from the September 2014 quarter to $402 billion.

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