November 9, 2025 • 5 mins
A $2.5 billion dollar boost for our largest bank.
ANZ New Zealand's announced a 21 percent increase in its annual profit.
It's largely down to a good year for the bank's hedging - investments designed to offset financial risks.
Chief Executive Antonia Watson says the bank also grew its balance sheet, and adjusted funds set aside for covering unpaid loans.
"In a sign of green shoots, we've actually released some of the credit provisions that we took in previous years."
Westpac has had a 13 percent profit increase - and BNZ's had no change.
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Episode Transcript
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Speaker 1 (00:00):
Nine two nine two texts. That's the text number standard
text fee supplied Barry SOOAP will have more to say
than to order off level after five o'clock. Now, let's
talk about banks, because yet another bank has posted an
increased profit. A and Z New Zealand has reported an
after tax profit of two point five billion dollars for
the year to September, which is up more than twenty percent.
Antonia Watson is the chief executive and is with us
(00:21):
now high Antonia, Hi, Heather, Now, how are you guys
doing so well when the economy has been such a turd?
Really well?
Speaker 2 (00:29):
I have to first story your attention to these strange
things called economic hedges, which are a fluctuating big number
due to accounting treatment. And if you look through that,
it's based on it's basically us valuing our derivatives boring.
If you look through that and you look at our
actual underlying customer business, our profit is up four percent,
which is about the same amount that our lending was
(00:49):
up and our deposits were up, so growing our profits
growing in line with the growth of our balance sheet.
Speaker 1 (00:54):
Okay, so up four percent, but still Antonia, up four
percent at a time when the economy is going backwards
by you know, one percent in a quarter. How did
you manage to do that?
Speaker 2 (01:05):
So a couple of things. One is that we grew
our balance sheet and the other one is the other
main one is that, you know, in a sign of
green shoots, as we said in our media release, we've
actually released some of the credit provisions that we took
in previous years. So last year we had a charge
and this year we've had a release.
Speaker 1 (01:22):
How much you be growing a balance sheet by just
out of interest?
Speaker 2 (01:25):
Over two hundred billion dollars. It's the size of our
assets on our balance sheets. So while I understand that
people really think it's a big I mean two point
five were underlying two point three is a big number.
But we're a really really big company.
Speaker 1 (01:41):
Yeah. Are we paying more in interest margins in New
Zealand than the Aussies are.
Speaker 2 (01:47):
A little bit more so when we do a direct
light for light comparison with our Australian business, we pay
New Zealanders pay about twenty one basis points more. That
is more than accounted for by the additional capital that
we need to hold in New Zealand.
Speaker 1 (02:01):
So when the reform coalition, the Banking Reform Coalition said
if the margins were the same as A and Z
Australia's margins, our mortgages would be one hundred basis points lower.
Are they wrong?
Speaker 2 (02:11):
They are comparing apples and oranges. They're comparing then the
margins in New Zealand to the margins of our entire
A and Z group in every country including New Zealand,
and importantly includes our institutional business, which has a big
markets business that doesn't focus on margins. It focuses on
returns and it has a big The rest of the
institutional business focuses a lot on other operating income, not
(02:33):
just margin because they get fees for transaction bands.
Speaker 1 (02:35):
So in New Zealand and bananas, really our net interest
margin is two point six percent. Yeah, in New zct
and what's the Australia for.
Speaker 2 (02:44):
And if you could so if you add together, if
you add together the same equivalent businesses, which is our
retail business and our business and private banking business, there's
is two point three nine percent, so twenty one basis
points lower.
Speaker 1 (02:57):
Okay, why do we pay more?
Speaker 2 (03:00):
As I said, we have, we're required to hold more
capital in New Zealand. And when you think about our capital.
Our shareholders invest nearly twenty billion dollars in our business
and we have to provide them a return on that.
They've had to invest another one point two billion this
year alone, just because of the increased capital requirements from
the rbn Z. That would translate into a ten basis
(03:21):
point increase in capital if we were to hold returns flat.
So the fact that we've increased our NIM by three
basis point not ten, just shows that the shareholders are
wearing some of the increase in capital, not just the customers.
Speaker 1 (03:33):
Okay, so Nicola will listen them are obviously attending to this.
At the moment, when it's all sorted, will we be
paying the same in the interest margin as the Australians.
Speaker 2 (03:42):
Well, it depends on what is sorted, because at the
moment the proposals from the Reserve Bank, one of them
makes us hold more cet one capital, which is the
most expensive form of capitals. It's not going to happen though,
you know that, Well we'd like to hope not. But
the other one requires us to hold more in sort
of at all, like instruments all together. So at the moment,
(04:03):
the proposals don't really change the dial match neither, and
of course don't know and don't forget hither. Also that
we're talking about stopping increases going forward, we're not going
back in time, so we're not going to really expect
significant reductions and interest. We're just going to expect less
pressure on mats going up.
Speaker 1 (04:21):
Okay, So Antonia, if we took away, if we took
that away all together and we flattened it out to
the same place in terms of capital requirements as the
Australians would be paying the.
Speaker 2 (04:29):
Same we'd be well, if we allowed for the amount
of capital they hold and did nothing else, we'd actually
be paying a little bit less here.
Speaker 1 (04:37):
Well, that sounds awesome. I like that. I've got to
ask this question. You're going to hate it. Are you
getting a bonus?
Speaker 2 (04:44):
Yes? I am. You'll be able to see that in
the room reports on trubished today. It's very complicated, but
overall this year I'll be paid just under two point
eight million dollars.
Speaker 1 (04:54):
Nice, you got any plans with it?
Speaker 2 (04:58):
Invested wisely?
Speaker 1 (05:00):
And you do not have to answer, Tony, You're so game,
you don't have to answer that question.
Speaker 2 (05:05):
Mate.
Speaker 1 (05:05):
What you say is bugger off here than none of
your business. Listen. Thanks thanks very much, I really appreciate
your time. There an Tonia Watson A and Z in
New Zealand's chief executive.
Speaker 2 (05:14):
For more from Hither Duplessy Allen Drive, listen live to
news Talks it'd B from four pm weekdays, or follow
the podcast on iHeartRadio
Nine two nine two texts. That's the text number standard
text fee supplied Barry SOOAP will have more to say
than to order off level after five o'clock. Now, let's
talk about banks, because yet another bank has posted an
increased profit. A and Z New Zealand has reported an
after tax profit of two point five billion dollars for
the year to September, which is up more than twenty percent.
Antonia Watson is the chief executive and is with us
(00:21):
now high Antonia, Hi, Heather, Now, how are you guys
doing so well when the economy has been such a turd?
Really well?
Speaker 2 (00:29):
I have to first story your attention to these strange
things called economic hedges, which are a fluctuating big number
due to accounting treatment. And if you look through that,
it's based on it's basically us valuing our derivatives boring.
If you look through that and you look at our
actual underlying customer business, our profit is up four percent,
which is about the same amount that our lending was
(00:49):
up and our deposits were up, so growing our profits
growing in line with the growth of our balance sheet.
Speaker 1 (00:54):
Okay, so up four percent, but still Antonia, up four
percent at a time when the economy is going backwards
by you know, one percent in a quarter. How did
you manage to do that?
Speaker 2 (01:05):
So a couple of things. One is that we grew
our balance sheet and the other one is the other
main one is that, you know, in a sign of
green shoots, as we said in our media release, we've
actually released some of the credit provisions that we took
in previous years. So last year we had a charge
and this year we've had a release.
Speaker 1 (01:22):
How much you be growing a balance sheet by just
out of interest?
Speaker 2 (01:25):
Over two hundred billion dollars. It's the size of our
assets on our balance sheets. So while I understand that
people really think it's a big I mean two point
five were underlying two point three is a big number.
But we're a really really big company.
Speaker 1 (01:41):
Yeah. Are we paying more in interest margins in New
Zealand than the Aussies are.
Speaker 2 (01:47):
A little bit more so when we do a direct
light for light comparison with our Australian business, we pay
New Zealanders pay about twenty one basis points more. That
is more than accounted for by the additional capital that
we need to hold in New Zealand.
Speaker 1 (02:01):
So when the reform coalition, the Banking Reform Coalition said
if the margins were the same as A and Z
Australia's margins, our mortgages would be one hundred basis points lower.
Are they wrong?
Speaker 2 (02:11):
They are comparing apples and oranges. They're comparing then the
margins in New Zealand to the margins of our entire
A and Z group in every country including New Zealand,
and importantly includes our institutional business, which has a big
markets business that doesn't focus on margins. It focuses on
returns and it has a big The rest of the
institutional business focuses a lot on other operating income, not
(02:33):
just margin because they get fees for transaction bands.
Speaker 1 (02:35):
So in New Zealand and bananas, really our net interest
margin is two point six percent. Yeah, in New zct
and what's the Australia for.
Speaker 2 (02:44):
And if you could so if you add together, if
you add together the same equivalent businesses, which is our
retail business and our business and private banking business, there's
is two point three nine percent, so twenty one basis
points lower.
Speaker 1 (02:57):
Okay, why do we pay more?
Speaker 2 (03:00):
As I said, we have, we're required to hold more
capital in New Zealand. And when you think about our capital.
Our shareholders invest nearly twenty billion dollars in our business
and we have to provide them a return on that.
They've had to invest another one point two billion this
year alone, just because of the increased capital requirements from
the rbn Z. That would translate into a ten basis
(03:21):
point increase in capital if we were to hold returns flat.
So the fact that we've increased our NIM by three
basis point not ten, just shows that the shareholders are
wearing some of the increase in capital, not just the customers.
Speaker 1 (03:33):
Okay, so Nicola will listen them are obviously attending to this.
At the moment, when it's all sorted, will we be
paying the same in the interest margin as the Australians.
Speaker 2 (03:42):
Well, it depends on what is sorted, because at the
moment the proposals from the Reserve Bank, one of them
makes us hold more cet one capital, which is the
most expensive form of capitals. It's not going to happen though,
you know that, Well we'd like to hope not. But
the other one requires us to hold more in sort
of at all, like instruments all together. So at the moment,
(04:03):
the proposals don't really change the dial match neither, and
of course don't know and don't forget hither. Also that
we're talking about stopping increases going forward, we're not going
back in time, so we're not going to really expect
significant reductions and interest. We're just going to expect less
pressure on mats going up.
Speaker 1 (04:21):
Okay, So Antonia, if we took away, if we took
that away all together and we flattened it out to
the same place in terms of capital requirements as the
Australians would be paying the.
Speaker 2 (04:29):
Same we'd be well, if we allowed for the amount
of capital they hold and did nothing else, we'd actually
be paying a little bit less here.
Speaker 1 (04:37):
Well, that sounds awesome. I like that. I've got to
ask this question. You're going to hate it. Are you
getting a bonus?
Speaker 2 (04:44):
Yes? I am. You'll be able to see that in
the room reports on trubished today. It's very complicated, but
overall this year I'll be paid just under two point
eight million dollars.
Speaker 1 (04:54):
Nice, you got any plans with it?
Speaker 2 (04:58):
Invested wisely?
Speaker 1 (05:00):
And you do not have to answer, Tony, You're so game,
you don't have to answer that question.
Speaker 2 (05:05):
Mate.
Speaker 1 (05:05):
What you say is bugger off here than none of
your business. Listen. Thanks thanks very much, I really appreciate
your time. There an Tonia Watson A and Z in
New Zealand's chief executive.
Speaker 2 (05:14):
For more from Hither Duplessy Allen Drive, listen live to
news Talks it'd B from four pm weekdays, or follow
the podcast on iHeartRadio
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