BNZ trims profit for software
- BNZ said changing its software-capitalisation accounting will lower half-year profit by NZ$253 million. - The bank explicitly cited AI's effect on software useful life as a contributing factor to the change. - Rapid AI-driven obsolescence can force controllers to revisit capitalisation, impairment triggers, and amortisation assumptions. (interest.co.nz)
BNZ says an accounting change for software will cut its half-year profit by NZ$253 million. (nzx.com) The Bank of New Zealand told the market on April 20 that it is shortening the useful life of capitalised software, narrowing the types of software costs it will treat as assets, and lifting its capitalisation threshold to NZ$20 million from NZ$5 million. (nzx.com) BNZ said the change will reduce its capitalised software balance by NZ$352 million at March 31, 2026, and lower statutory profit for the six months ended that date by NZ$253 million after tax. The bank also said there is no impact on capital because capitalised software is already deducted from Common Equity Tier One capital. (nzx.com) Software capitalisation lets a company put some development costs on the balance sheet and spread the expense over several years, instead of booking all of it at once. BNZ said that timeline is getting shorter as technology changes faster. (interest.co.nz) BNZ explicitly tied that shorter timeline to artificial intelligence, saying its revised policy better matches “a rapidly evolving technology environment” with “faster obsolescence, including from increased AI adoption.” (interest.co.nz) The move also lines BNZ up with parent National Australia Bank, which the New Zealand lender said is making the same policy changes. BNZ is a wholly owned subsidiary of National Australia Bank Group. (interest.co.nz) The size of the adjustment stands out against BNZ’s last reported March-half result. For the six months to March 31, 2025, BNZ reported statutory net profit of NZ$795 million. (interest.co.nz) That earlier result also showed underlying profit of NZ$1.075 billion, a gap that helps explain why accounting treatment can move reported earnings sharply even when cash generation and regulatory capital do not move in step. (interest.co.nz) BNZ is due to report its March 2026 half-year result on May 7, 2026. By then, the bank’s software line will look smaller, and its profit line will reflect a shorter shelf life for code. (interest.co.nz)
