BNZ makes loss on tax case; mortgage book grows strongly

National Australia Bank-owned Bank of New Zealand has reported a bottom line third quarter loss due to losing its structured finance tax case recently but its mortgage book grew strongly.

Tuesday, September 1st 2009, 4:20PM

by Jenny Ruth

BNZ is appealing the tax case but provided $661 million against its nine months result, leading to a reported $183m net loss compared with a $597 million net profit in the same nine months a year earlier, its latest general disclosure statement shows.

Since it had reported a $400 million net profit for the six months ended March, it made a $217 million net loss in the third quarter.

Increasing charges for bad loans also dragged down the result with BNZ increasing this charge by $43 million in the June quarter, taking charges for the nine months to $142 million. Mortgages accounted for only $27 million of the nine-month charges.

By contrast, net interest income rose 2.8% to $331 million in the quarter and by 3.2% to $1.04 billion in the nine months ended June.

BNZ's mortgage book grew by $637 million to $25.31 billion in the three months after growing $458 million in the March quarter and shrinking by $22 million in the December quarter.

Using Reserve Bank figures as a proxy for the market, BNZ accounted for 36.1% of all new lending on mortgages by registered banks in the June quarter, taking its share of the market to 15.91% from 15.69% at the end of March.

BNZ had a further $2.28 billion in mortgages off balance sheet at June 30, mainly loans approved but not yet drawn down, down from $2.43 billion at March 31.

Its mortgage book appeared to get slightly more risky in the latest quarter with its proportion of loans with loan-to-value ratios (LVRs) above 80% rising to 11.7% from 11.5% at March 31.

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