TSB's profit up, loan book down
TSB Bank's net profit rose strongly in the June quarter, as did its deposit book, but its mortgage book shrank slightly.
Wednesday, August 27th 2008, 6:45AM
by Jenny Ruth
TSB's mortgage book slipped from $1.83 billion at the end of March to $1.82 billion at the end of June. That's the first time its mortgage book has gone backwards since Good Returns began tracking it in December 2002.
Using Reserve Bank figures as a proxy for the market, that suggests TSB's share of the mortgage market eased from 1.22% in March to 1.2% in June. (With the introduction of the new Basel ll rules from the March quarter for all except the Bank of New Zealand and HSBC which are still reporting under the old Basel l rules, the Reserve Bank figures are no longer as good a proxy as previously. The actual total of the seven home lending banks at March 31 was $143.7 billion compared with the Reserve Bank's figure of $150.12 billion.)
The loan-to-value (LVR) details show 90.4% of TSB's mortgage book is at LVRs below 80% with just 3.4% at LVRs above 90%.
TSB deputy managing director Kevin Murphy says the shrinking of the mortgage book reflects customers repaying debt.
"Our net position has tapered off a little, but we're still writing good business at similar levels as we have in the past," Murphy says.
TSB's past due residential mortgages rose slightly from $1.98 million, 0.11% of the total book, in March to $2.17 million, 0.12%, in June.
Murphy says both this and the concentration on repaying debt reflect the depressed state of the economy.
"We're still confident past due assets won't end up being bad debts. It's just a timing thing for a lot of people and their ability to make loan repayments," he says.
Two months into the September quarter and TSB's mortgage book has remained "very steady".
The growth in the deposit book reflects concerns about finance companies, Murphy says.
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