BNZ cuts 30 per cent office space as work from home model becomes permanent

There’ll be no going back to spending five days a week in the office for workers of one major corporate and its chief executive says it’s not alone in making the move.

The Bank of New Zealand has cut its corporate office space by 30 per cent after a permanent shift to a hybrid working model where its nearly 5000 staff work either two or three days from home.

Speaking after its financial result was released on Thursday, BNZ chief executive Angela Mentis said it had permanently decided to shift to a hybrid model and reduce its physical footprint.

“When I speak to other corporates they are all doing the same thing in New Zealand. The hybrid working model is here to stay – it provides flexibility and it also provides an opportunity to work and live differently.”

Mentis said feedback from staff had been overwhelmingly positive.

“When I speak to the teams, they are loving the flexibility, loving the lack of travel. They are also loving it when they are in the office and are collaborating and they are seeing each other and problem-solving.”

BNZ chief financial officer Peter MacGillivray said the move had allowed the bank to consolidate its Auckland corporate premises down from three to two.

“In Auckland, we have been in three buildings and were able to exit one of those – 125 Queen St. We have reduced that down and it has worked incredibly well.”

In Wellington, it was consolidating its workers into a couple of spaces including a new building in Whitmore St.

“We are in about three or four different buildings in Wellington so we will be able to reduce a lot of our space and consolidate the team into a couple of buildings.”

The bank is also in the process of closing 38 branches – a move that will be completed by July. While the branches are closing workers are largely staying employed but working from home.

The BNZ’s half-year net profit rose 80 per cent to $660 million after the bank benefitted from a strong bounceback in the economy and big write-backs on its impairment charges.

Excluding notable items, its net profit increased by $64m or 13 per cent in the six months to March 31, compared to the same prior period.

Mentis said the result was evidence of a stronger and swifter than expected recovery.

“The continued resilience of our economy is testament to New Zealand’s effective response, and the creativity and courage of businesses in the face of the pandemic,” she said.

The bank’s net interest income rose 2.1 per cent to $1.073 billion while it made large gains on its financial instruments helping to push up its operating income by 7 per cent to $1.4b.

At the same time, its operating expenses were down nearly 23 per cent.

MacGillivray said 12 months ago the business took accelerated depreciation for a lot of its internally generated software equating to a cost of $151m.

“That didn’t repeat this year so that is the big driver of the reduction in costs.”

Mentis said the bank had focused on supporting its business customers through Covid and had lent up to its $1.5 billion limit on the government-backed Business Finance Guarantee Scheme supporting 1200 customers.

Reserve Bank figures show as of early April around $2b in total had been lent on the scheme which has the capacity to go up to $6.25b. The scheme ends on June 30.

Like its competitors, BNZ also wrote back a large chunk of its credit impairments in its half-year financial result.

In March last year it had a $151m charge but this half that turned into a $17m write-back.

Mentis said: “We believe the economy is performing better than expected but we don’t think you can celebrate at half-time.

“We have remained prudent, we can see those bumps in the road. For example, we haven’t seen the full impact from the lack of tourist spending, we can see capacity constraints across the market, there are some inflationary pressures and there is continued uncertainty with the international Covid situation so we have remained prudent.

“The write-backs have been some previously poorer performing businesses that actually managed to do some asset sales and pay us back. We haven’t done any write-backs of provisions at this stage.”

Mentis said capacity constraints were something its customers were talking about weekly.

“We are hearing stories of four-month delays to get white goods from Europe, all our customers are seeing a doubling of their freight costs and we are seeing shortages of wood and plastic and other materials.”

“I think those constraints are a real issue. When I speak to customers many of them have adjusted which shows the resilience of New Zealand businesses.”

She said some were being forced to source products locally or bring in more inventory at any one time.

“But I think that will be a constraint to growth. You can see it in construction, even in our tourism sector, I spoke to a business the other day and even with the transtasman bubble they are not able to get the labour they need to be fully operational. You can see it with the horticulture industry, and with specialist labour.”

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