BNZ's mortgage book grew at twice its market share

Bank of New Zealand's mortgage book grew at nearly twice its market share during the September quarter while its profitability also improved dramatically.

Tuesday, December 14th 2010, 9:04PM

by Jenny Ruth

BNZ's latest general disclosure statement (GDS) shows its mortgage book grew by $242 million to $26.25 billion in the three months ended September. That was slightly less than the $245 million growth shown in the June quarter which was the biggest quarterly growth since the June quarter of 2009 when its mortgage book grew $637 million.

While two small banks, TSB Bank and SBS Bank, had yet to lodge their September quarter GDSs, their numbers will make little difference to the overall picture. Excluding those two, BNZ accounted for 28.8% of the total $840 million growth in mortgage lending by registered banks in the September quarter.

That took BNZ's market share to about 16.5% from 16.44% three months earlier.

Total growth in bank lending on mortgages in the three months is shaping up to be the lowest since the second half of 2008 during the worst of the global financial crisis.

The $840 million figure (based on previous form, TSB and SBS will add about $60 million to the total) compares with $1.06 billion growth in the June quarter and $2.3 billion in the September quarter last year. During the September quarter of 2008, total bank lending on mortgages was just $0.05 billion and was $0.97 billion in the December 2008 quarter.

BNZ's net profit jumped to $26 million in the September quarter from $2 million in same quarter last year when results were distorted by tax charges relating to the bank's structured finance deals.

But even before tax, the bank's $57 million quarterly profit was well ahead of the $4 million recorded in the year-earlier quarter. That partly reflected a 5.7% increase to $334 million in net interest income and was despite charges against profit for bad loans rising slightly to $52 million from $48 million in the year-earlier quarter.

However, charges for mortgages gone bad eased to $16 million from $22 million in the year-earlier quarter.

BNZ's GDS shows the percentage of its mortgage book with loan-to-value ratios (LVRs) above 80% rose slightly to 10.8% at September 30 from $10.5% at June 30. However, this is low compared with other banks - Westpac's above 80% LVR loans were 22.9% of its book at September 30 while ASB's were 13.4%.

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