by Jenny Ruth
The bank's capital base has also been boosted by a further $400 million investment by its Australian parent, National Australia Bank.
Treasurer Tim Main says rather than fuelling an aggressive growth spurt, the fresh capital will help position BNZ for the new Basle lll banking rules which the Reserve Bank is planning to phase in from the end of this year.
"We think the outlook is going to be relatively subdued in terms of the economy with low levels of credit growth in both housing and business and competition remains fairly intense," Main says.
Nevertheless, BNZ is pursuing "a deliberate strategy of increasing our retail footprint." Of all the major banks, BNZ has the smallest share of the retail market, Main says.
Using Reserve Bank figures to measure both the deposits and mortgage markets, BNZ says its share of retail deposits rose by $1.7 billion, or 5.3% to $33.5 billlion between September last year and March 31 this year, taking its market share from 18% to 18.7%. Deposits grew by $3.1 billion, or 10.2%, in the year ended March.
It says its share of the mortgage market has risen from 16% in March last year to 16.2% in both September last year and March this year. These figures are different from the figures GoodReturns derives from banks' quarterly disclosure statements - BNZ's statement for the March quarter hasn't been released yet.
Main agrees BNZ's existing capital would already meet the new standards.
"We think we're just being prudent in improving our levels of capital. We're very conscious of having a capital level which is appropriate for our credit rating and balance sheet," he says
BNZ's results for the six months ended March show its Tier One capital ratio, mainly a measure of equity, was 9.59%, well above the current 4% minimum, and its total capital ratio was 12.39% at March 31 compared with the 8% minimum.
The central bank is planning to lift the Tier One minimum to 6% and the minimum total capital ratio to 10.5%.
BNZ is also increasing its capital through organic growth: cash earnings in the six months ended March rose 36% to $385 million compared with the same six months a year earlier.
The bank's net interest margin rose by 17 basis points to 2.41% compared with the year-earlier half year. "The favourable portfolio mix from customers' continued preference for variable rate products, as well as repricing of the asset portfolio help support the net interest marging," BNZ says.
"This was partially offset by funding cost pressure from growth in retail deposits in a competitive market together with increases in the term profile of wholesale funding."
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