BNZ's mortgage book, profits grew strongly in December quarter

BNZ chalked up another strong quarter of mortgage book growth and its profit surged in the December quarter.

Monday, February 20th 2012, 12:38PM

by Jenny Ruth

The first of the banks to lodge its disclosure statement for the December quarter, BNZ's mortgage book grew by $227 million to $27.61 billion, based on its loan-to-valuation ratio (LVR) tables.

That followed BNZ's $305 million growth in the September quarter and brought its mortgage book's growth for calendar 2011 to $1.18 billion.

Reserve Bank figures show mortgage lending by registered banks grew $1.28 billion in the three months ended December - interestingly, most of that growth came in the month of October with lending in November and December increasing just $22 million.

If the central bank's figures were an accurate proxy for the figures in banks' disclosure statements, that would mean BNZ accounted for 17.7% of bank mortgage lending in the December quarter. Its market share at September 30 was 16.39%.0

BNZ's figures suggest much of its mortgage book growth has been through relaxed credit criteria - its loans with LVRs above 80% grew by $138 million in the three months ended December, or 60.8% of the book's overall growth.

Loans with LVRs between 80% and 89% rose by $73 million to 6.5% of its total book at December 31 from 6.3% three months earlier while loans with LVRs 90% and above rose by $65 million to 7.2% of the total book from 7.1% three months earlier.

BNZ's net profit for the three months ended December jumped to $289 million from $150 million in the same quarter a year earlier.

Most of that growth came from net unrealised gains on financial instruments, although net interest income rose 7.2% to $358 million and charges against profit for bad loans dropped to just $3 million from $39 million in the year-earlier quarter.

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