BNZ grows mortgage book strongly in March Qtr but profitability falls

Bank of New Zealand grew its mortgage book strongly in the March quarter although its profitability fell.

Thursday, May 26th 2011, 9:21AM

by Jenny Ruth

BNZ's March quarter disclosure statement shows its mortgage book, using the same capital adequacy-based measure goodreturns.co.nz has used since December 2002, grew by $314 million to $26.74 billion in the three months.

Another measure of its mortgage book, BNZ's note on loans and advances to customers, information not all banks provide, suggests it grew by $311 million to $26.74 million.

Its loan-to-valuation ratio (LVR) table, which includes off-balance sheet mortgages such as loans approved but not drawn down and the measure GoodReturns is likely to use in future, stood at $29.44 billion.

BNZ says there are no equivalent figures which can be derived from its previous disclosure statements which only included undrawn limits on established mortgages and not irrevocable commitments to lend for which the bank hadn't yet taken security. The LVR table will include both from now on.

The figures on mortgage lending reported in banks' disclosure statements for this quarter so far are already far in excess of the $472 million growth in mortgage lending by registered banks shown in the Reserve Bank's figures - Westpac's showed a $1.63 billion increase, although the true growth is nearer the $200 million mark, while ANZ Bank's indicated growth of about $500 million.

So no conclusions about market share can be drawn until all the other banks have lodged their statements.

BNZ's net profit for the quarter fell 27.1% to $105 million, although the year-earlier quarter's profit was boosted by tax write-backs. Pre-tax profit fell 12.4% to $148 million, largely reflecting losses from revaluing financial instruments and a higher charge against profit for bad loans.

The latter rose to $56 million compared with $45 million in the year-earlier quarter and is in contrast with the other major banks which are showing declining charges for bad loans.

BNZ's net interest income grew 9.6% to $341 million in the three months.

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