ANZ's market share looks to have fallen

ANZ Bank's share of the mortgage market probably continued to slide in the December quarter even as a big drop in charges for bad loans boosted profitability.

Monday, February 28th 2011, 12:02PM

by Jenny Ruth

ANZ's December quarter general disclosure statement for its overall New Zealand operations (GDS) shows its mortgage book fell by $175 million to $53.61 billion.

That's using the same capital adequacy-based measure GoodReturns has used since December 2002. However, those figures aren't comparable with the figures reported by the other banks and are overstated because they are prepared under Basel 1 rules while the other banks' figures use Basel ll rules.

In any case, Wesptac's change in how it calculates its nearest equivalent figures will mean these December quarter figures for all banks will be so distorted as to be meaningless.

Other measures of ANZ's mortgage book contradict the capital adequacy-based measure. Its note on net loans and advances shows it growing by $6 million to $53.9 billion in the three months while its loan-to-valuation ratio (LVR) table shows it growing by $311 million to $55.04 billion.

Reserve Bank figures, which often don't marry at all well with figures derived from all the home-lending banks' GDSs, show all bank lending on housing grew $422 million in the December quarter.

ANZ continued to transfer mortgages from its New Zealand subsidiary to its local branch during the quarter. The subsidiary's GDS's note on loans and advances show housing loans falling by $307 million to $43.58 billion during the quarter, though, again the other two measures show completely different figures.

ANZ established its New Zealand branch in January 2009 to get around Australian prudential rules preventing an Australian bank from lending more than 50% of its equity to a subsidiary. Before that it operated solely through its subsidiary.

ANZ's LVR table shows its mortgages with LVRs above 80% rose to 21.7% of the portfolio from 20.1% at September 30 while those with LVRs above 90% rose from 8.9% to 9.9%.

ANZ says it has made a number of changes to the way it calculates its LVRs but doesn't explain what those charges are. "These changes reflect enhancements to the calculation methodology and to improve the robustness of the underlying source data," its GDS says.

ANZ's charges against profit for bad loans fell to just $34 million from $152 million in the previous December quarter, helping to lift net profit by 2.8% to $260 million for the quarter.

Net interest income rose 7.6% as gross interest income rose 12.2% while gross interest expense rose by a greater 15%.

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