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Bank margins trimmed: KPMG

KPMG says mortgage lending is arguably the most competitive part of the financial services industry in New Zealand.

Tuesday, May 1st 2001, 2:24PM

by Jenny Ruth

Housing construction may remain sluggish, but mortgage lending continues to dominate New Zealand bank’s lending profiles, according the KPMG’s latest annual survey of financial institutions.

Mortgage lending in 2000 grew by $2.7 billion and makes up 47% of the total lending by New Zealand registered banks and 37% of lending by international banks which operate branches here.

"The mortgage lending market is arguably the most competitive in the New Zealand financial services industry, given the number of participants involved," KPMG says.

"The wider financial services industry, not just registered banks, is actively involved in mortgage lending and accordingly this segment of the retail banking market will continue to be intensely competitive."

Statistics New Zealand figures released yesterday showed that although new housing permits rose from 1,397 in February to 1,762 in March, in seasonally-adjusted terms they were down 1.2%

The government statistician said the trend in housing permit numbers has been flat for the last few months after falling sharply between August 1999 and November 2000.

KPMG’s survey also shows that although Deputy Prime Minister Jim Anderton may rail at the foreign-owned banking sector for making profits at the expense of New Zealanders, the survey shows bank profit margins here are slim by international comparisons.

The weighted average interest margin, the difference between what banks pay for deposits and what they collect from loans, fell 13 basis points to just 2.31% during the year, its lowest level since KPMG began tracking margins 11 years ago.

The domestic picture is somewhat distorted by the much lower margins earned by most bank branches in New Zealand which mostly operate in the wholesale sector. Bank branches, excluding WestpacTrust, saw their margins contract from 0.9% in 1999 to 0.7% in 2000.

Registered banks and WestpacTrust saw their margins dip from 2.6% in 1999 to 2.57% in 2000.

Still, that’s also low by international comparisons. In Australia, the average margin is 2.9%, in Britain 2.7% and in the US 3.3%.

Despite that, New Zealand registered banks as a whole improved their underlying performance by 16% and their net profit by 7% to $1.7 billion.

The survey also shows the New Zealand banks continue to be useful investments for their mostly Australian parents, although not quite as good as in 1999. The return on net assets of New Zealand banks of 22.5% compared with 18.5% for their Australian counterparts in 2000. In 1999, the New Zealand banks returned 24.5% compared with 17.3% for their Australian counterparts.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AMP Home Loans 6.99 5.99 6.29 6.60
AMP Home Loans $200k+ 6.89 5.89 6.19 6.50
AMP Home Loans LVR <80% - - 5.85 6.29
ANZ ▲6.74 6.05 6.49 6.65
ANZ LVR > 90 ▲6.74 6.55 6.99 7.15
ANZ Special - - 6.09 -
ASB Bank 6.50 6.09 6.40 6.65
ASB Bank Special - 5.95 - -
BankDirect 6.50 6.09 6.99 6.65
BankDirect Special - 5.95 - -
BNZ - Classic - - - 6.25
Lender Flt 1yr 2yr 3yr
BNZ - GlobalPlus 6.49 5.99 6.39 6.59
BNZ - Mortgage One 6.90 - - -
BNZ - Rapid Repay 6.49 - - -
BNZ - Std, FlyBuys 6.49 5.99 6.39 6.59
BNZ - TotalMoney 6.49 - - -
Credit Union Auckland ▲6.70 - - -
Credit Union Baywide 6.10 5.90 6.50 -
Credit Union North 6.45 - - -
Credit Union South 5.75 - - -
eMortgage 6.04 6.15 6.69 7.19
Finance Direct 6.10 6.45 6.69 7.10
Lender Flt 1yr 2yr 3yr
First Credit Union 6.45 - - -
General Finance 5.95 6.25 6.50 7.10
HBS Bank 6.15 5.85 6.20 6.25
HBS Special - - - 5.95
Heartland 6.45 6.75 7.00 7.60
Heretaunga Building Society 6.25 5.85 6.50 -
Housing NZ Corp ▲6.50 ▲6.00 6.30 ▲6.60
HSBC Premier 6.59 5.95 5.99 6.25
HSBC Premier LVR > 80% - - - -
HSBC Special - 5.85 5.85 5.85
Kiwibank 6.40 5.99 6.29 6.29
Lender Flt 1yr 2yr 3yr
Kiwibank - Capped 5.65 6.50 - -
Kiwibank - Offset 6.30 - - -
Kiwibank LVR > 80% - - 5.85 6.29
Liberty 5.64 - - -
Napier Building Society 5.80 6.00 6.70 -
Nelson Building Society 6.75 5.95 6.60 -
NZ Home Loans 6.35 6.09 6.40 6.65
Perpetual Trust 7.70 - - -
RESIMAC - lo doc 7.34 7.06 7.38 7.82
RESIMAC LVR < 80% 6.34 6.06 6.38 6.82
RESIMAC LVR < 85% 7.34 7.06 7.38 7.82
Lender Flt 1yr 2yr 3yr
RESIMAC LVR < 90% 8.34 8.06 8.38 8.82
SBS Bank 6.15 5.85 6.20 6.25
SBS Bank Special - - - 5.95
Silver Fern 5.95 6.10 6.55 7.05
Sovereign 6.60 6.09 6.40 6.65
Sovereign Special - 5.95 - -
The Co-operative Bank 6.45 6.00 6.00 6.25
TSB Bank 6.49 6.00 6.19 6.60
TSB Special - - 5.80 -
Wairarapa Building Society 6.20 5.75 5.95 -
Westpac 6.24 6.09 6.39 6.65
Lender Flt 1yr 2yr 3yr
Westpac - Capped rates - 6.49 6.99 -
Westpac - Offset 6.24 - - -
Westpac Special - 5.95 - -
Median 6.45 6.00 6.39 6.60

Last updated: 24 July 2014 10:31am

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