ANZ's mortgage book -- the mystery continues

Trying to establish what's happening to ANZ Bank's mortgage book continues to be trying.

Thursday, June 2nd 2011, 7:14AM

by Jenny Ruth

However, it appears from ANZ's New Zealand branch's disclosure statement - which includes all the bank's activities in this country, including its subsidiary - that the mortgage book didn't grow as strongly as the subsidiary's disclosure statement, published on May 21, suggested.

The subsidiary's accounts, which included amounts for mortgages sold to the branch, suggested ANZ's mortgage book grew by about $500 million in the quarter.

Three different measures of the mortgage book included in the branch's document suggest the mortgage book grew by either $30 million, using the same figures goodreturns.co.nz has used since 2002, or by $134 million, derived from ANZ's note on loans and advances, or by $182 million, derived from its loan-to-valuation table, including both drawn and undrawn mortgages but excluding commitments to lend.

ANZ's mortgage lending including both drawn and undrawn mortgages and commitments to lend totaled $56.92 billion at March 31 but no equivalent figure can be derived from its December document.

Unfortunately, ANZ's branch document no longer provides separate information on its branch-only position excluding its subsidiary as previous quarters' documents have. It is also prepared using the Basel l rules while the subidiary's accounts use the Basel ll rules which result in significant differences.

Since the other three Australian-owned banks only conduct mortgage lending through their subsidiaries and report using Basel ll rules, that makes comparisions like a stab in the dark, no matter which figures one chooses.

The branch document does confirm ANZ's profitability improved substantially in the March quarter, up 63.9% to $218 million, with net interest income growing 5.1% to $637 million and charges against profit for bad loans sinking to $51 million from $173 million in the year-earlier quarter.

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