ASB's home loan book shrinks

ASB Bank's mortgage book actually shrank in the three months ended June 30 although its June quarter profitability soared.

Monday, September 13th 2010, 9:20PM

by Jenny Ruth

Figures in ASB's June quarter general disclosure statement (GDS) show its mortgage book shrank by $65 million to $37.84 billion compared with $37.91 billion at March 31.

ASB’s home loan business shrank during the quarter when the combined lending of all the other registered banks, except HSBC, grew by a total of $1.05 billion in the three month period.

ASB had a further $4.46 billion in mortgages off-balance sheet, generally loans approved but not drawn down, at June 30 compared with $4.41 billion at March 31.

Only 3.9% of ASB's mortgage book had loan-to-valuation ratios (LVRs) above 90% at June 30 and a further 9.8% had LVRs above 80%.

While, as already reported, ASB's annual net profit dropped to $236 million in the year ended June 30 from $425 million the previous year, it's net profit for the June quarter jumped 57% to $140 million. The annual figure was depressed by a one-off tax charge and the pre-tax profit was steady.

The quarterly improvement mostly reflected lower charges against profit for bad loans - for the full year ended June, the charge fell to $125 million compared to the $133 million charges for the nine months ended March, an $8 million improvement. In the year-earlier June quarter, charges for bad loans increased $91 million.

Interestingly, the improvement in the latest quarter came from other retail loans and corporate loans while charges for mortgages gone bad rose $20 million - although at $99 million, still tiny compared with ASB's total book.

ASB's net interest income rose 1.5% to $272 million in the June quarter and was up 5.4% to $1.03 billion for the year.

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