As the banking industry holds its breath for the verdict on bank conduct and culture next Monday from the Reserve Bank and Financial Markets Authority, BNZ is defending its almost double-digit profit boost announced yesterday.

BNZ’s net profit rose 9.8 percent in the year ended September 30, sneaking just over $1 billion. Total operating revenue was up 6.2 percent to $2.5 billion.

On Wednesday, ANZ New Zealand reported an even larger net profit increase – up 12 percent to $1.99 billion, including unrealised gains on financial instruments and insurance policies. ASB’s annual profit (for the June year) was up 10 percent to $1.2 billion, while Kiwibank posted a 3 percent underlying profit rise to $133 million for the same period. Westpac is expected to report healthy gains too, when it reports on Monday.

The RBNZ and FMA investigation comes after sometimes shocking revelations from the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The focus from the local regulators is firmly on making sure banks provide products and services which benefit customers, not just the banks’ bottom lines.

As FMA chief executive Rob Everett wrote in the annual report last week: “The importance of good conduct has been clearly underlined. We are determined to play our part to ensure this opportunity for customer-centric conduct to be permanently embedded in the culture of the financial sector is not lost.”

Talking to BusinessDesk after the profit announcement yesterday, BNZ chief executive Angie Mentis said the bank will focus in 2019 on “making sure we are providing the right outcomes for customers”.

This includes $10 billion over five years available for lending to businesses outside the three main cities, commitment to simplify fees and halving the number of products it offers, and an investment of $250 million over three years in unspecified “initiatives to accelerate its drive to deliver a world-class, fast and simple banking experience for customers”.

The bank previously announced it was getting rid of sales targets for frontline staff after concern from consumer bodies, unions and regulators that pressure on staff to meet quotas could be pushing them to sell unsuitable products.

Mentis, who took the top job at BNZ in January after 11 years at parent National Australia Bank, says the fact NAB’s New Zealand unit performed better than Australia reflected underlying factors like a stronger economy, better housing sales and low unemployment rather than tougher regulatory scrutiny in Australia.

She said customer satisfaction is stronger in New Zealand than across the Tasman and BNZ still has good customer trust levels.

In terms of vulnerable customers, Mentis said BNZ has committed to offering low or no interest loans to customers without access to bank credit and over the last 12 months had helped 1500 customers, saving them almost $2 million in interest payments.

“It’s about sustainability. We are here for the long term,” she said.

Nikki Mandow was Newsroom's business editor and the 2021 Voyager Media Awards Business Journalist of the Year @NikkiMandow.

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