ASB's profit and mortgage book stall in Dec Qtr

ASB Bank’s second quarter profit was flat as losses on impaired loans charged to profit jumped while its mortgage book grew only slightly.

Wednesday, March 18th 2009, 9:35PM

by Jenny Ruth

ASB Bank’s profit for the three months ended December rose to $144 million from $143 million in the same three months a year earlier, bringing its six months result to $238 million, down 10.9% on its previous first half.

Its charges for impaired loans jumped to $48 million in the latest three months from $19 million in the first quarter, bringing its six months charges to $67 million compared with just $5 million in the previous first half.

Of the first-half charges, $21 million relate to mortgages, $6 million to other retail loans and $40 million to business loans. ASB’s 90-day past due assets rose to $309 million at December 31, from $187 million at September 30, of which $198 million were mortgages, up from $111 million at September 30.

ASB’s on-balance sheet mortgages grew just $23 million to $36.43 billion in the three months ended December. Using Reserve Bank data from registered banks as a proxy for the market, ASB’s share of the mortgage market fell to 23.4% at December 31 from 23.75% three months earlier.

The market share loss was exacerbated by the $1.63 billion SBS Bank’s mortgage book being included for the first time – SBS gained its banking licence on October 7.

The Reserve Bank figures show total mortgage lending by registered banks grew $2.43 billion, including the SBS book, to $155.7 billion in the three months ended December.

ASB had a further $4.51 billion in off-balance sheet mortgages at December 31, down from $4.57 billion at September 30, which are generally loans approved but not drawn down.

The proportion of ASB’s mortgages with loan-to-value ratios (LVRs) above 80% rose to 16.9% at December 31 from 15.9% at September 30.

About 9.4% of its mortgages had lender’s mortgage insurance for the top 20% of each loan including 24.7% of those with LVRs above 90% and 21.7% of those with LVRs between 80.1% and 90%.

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