BNZ share of mortgage market shrinks

Bank of New Zealand’s net profit for the December quarter jumped 52%, partly on foreign exchange and interest rate trading gains, although its mortgage book and its share of the mortgage market shrank.

Wednesday, February 18th 2009, 9:40PM

by Jenny Ruth

BNZ’s latest general disclosure statement shows net profit jumped to $260 million in the three months ended December from $171 million in the same quarter of 2007 with net gains on financial instruments, which include trading profits, rising to $111 million from just $28 million in the previous quarter.

The profit gain was despite impairment losses on credit exposures rising to $35 million from $12 million in the year-earlier quarter.

The bank’s on-balance sheet residential mortgages totalled $24.22 billion at December 31, down from $24.24 billion at September 30. At December 31, BNZ had another $2.16 billion in off-balance sheet mortgages, generally loans approved but not yet drawn down. That’s up from $2.13 billion at September 30.

Using Reserve Bank figures as a proxy for the market, BNZ’s mortgage book at December 31 accounted for 15.55% of housing loans by registered banks, down from 15.82% three months earlier.

BNZ’s loan-to-value ratios (LVRs) improved with mortgages with LVRs above 90% shrinking to 5.9% of the book from 6.4% three months earlier while mortgages with LVRs below 60% rose to 37.5% of the book from 36.9% three months earlier.

Earlier this month, the Australian parent warned BNZ’s asset quality was under pressure.

BNZ’s total allowance for impairment losses on credit exposures at December 31 rose to $219 million from $195 million three months earlier. Total impaired assets rose to $269 million at December 31 from $201 million three months earlier. Impaired residential mortgages rose to $96 million from $60 million while impaired corporate exposures rose to $153 million from $140 million. BNZ’s total assets at December 31 were $76.1 billion.

« United Home Loans unable to write new business

Rate Watch: Next round of cuts starting »

Special Offers