BNZ’s profitability stood still last year, despite the bank increasing its lending and receiving more in deposits.

The Australian-owned bank reported a net profit after tax of $1.5 billion in the year to September – a 0.5% decrease from the same period the prior year.

BNZ increased its mortgage lending by 6.4% and its business lending by 2.2%. The value of the deposits it received also increased by 5.8%.

However, the income the bank received from its lending relative to that it paid its depositors fell over the year.

Speaking to the Herald, chief executive Dan Huggins said that if you strip out all the other factors that go into the bank’s net interest margin and only look at the margin on lending versus deposits, this fell by 9 basis points.

Huggins said this reflected the fact banks competed “pretty” strongly on the interest rates they offered customers.

BNZ’s overall net interest margin, as reported in its results, rose by 6 basis points to 2.43%.

Huggins said this was largely because of the way the bank managed its financial risk, using hedging etc.

Another factor that influenced BNZ’s profitability, when compared with 2024, was the sale of its wealth management business in 2024 to Harbour Asset Management, which is part of FirstCape Group.

The sale boosted the bank’s revenue in 2024, partially explaining why its revenue fell by 3.7% in 2025.

BNZ’s operating expenses were consistent between 2024 and 2025, while its credit impairment charge fell.

The value of the banking sector’s bad debts, as a portion of its loan books, appears to be turning a corner now that interest rates are falling.

Huggins said BNZ’s overall financial result reflected the economic environment over the year.

BNZ chief executive Dan Huggins.

He defended BNZ – one of New Zealand’s main business bankers – increasing its mortgage lending more than its business lending.

“There has been plenty of capital available for businesses, but for that capital to be deployed by businesses, they need to be investing in their businesses,” Huggins said.

“We’ve come through this period where there’s been a bit more uncertainty and in a number of business sectors, people have been strengthening balance sheets by paying down debt, which is appropriate in the environment we’ve been in.”

While the economy is taking longer than expected to recover, Huggins believed there were “reasons for optimism”.

“Interest rates have fallen significantly and New Zealand’s primary export sector is experiencing buoyant conditions, driven by high export prices, a lower NZ dollar and solid production,” he said.

“Manufacturing and tourism activity is recovering, and building consents and job ads are starting to lift after a long period of low activity.”

Huggins’ pay packet rose from $1.76 million in 2024 to $1.82m in 2025.

Jenée Tibshraeny is the Herald’s Wellington Business Editor, based in the Parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.