BNZ defends its home loan strategy
Bank of New Zealand held its share of the mortgage market steady at 16.2% in the March quarter, despite ceasing to be so aggressive with its home loan offerings.
Wednesday, May 11th 2005, 9:58PM
by Jenny Ruth
That compares with 15.7% at the end of March last year.
Managing director Peter Thodey attributes this accomplishment to his bank's decision to stop dealing with mortgage brokers and its "Unbeatabe" advertising campaign.
"This result makes an interesting comparison with two of our competitors, both of whom have announced recently an erosion of their interest margins while also losing market share," Thodey says.
"The doomsayers who say Bank of New Zealand will pay for the home loan price war have to reflect closely today on their views," he says.
The bank's net interest income was up 11.4% in the six months ended March compared with the same period last year and, although Thodey admitted home loan margins are under pressure, the bank's overall net interest margin was up four points at 2.49%.
"Critics of our home loan strategy fail to understand the advantage that we enjoy because we own all of our distribution channels," he says.
"Our major competitors are saddled with paying for an additional distribution channel, namely mortgage brokers. We simply don't that that cost and it allows us to pass savings to customers."
BNZ reported a 0.4% increase in first-half net profit to $265 million. While that increase was small, the New Zealand bank's performance was a high point of its parent, National Australia Bank's, results. Its underlying net profit fell 11% to A$1.87 billion.
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