BNZ mortgage book grows, profit falls

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The National Australia Bank-owned Bank of New Zealand's mortgage book grew strongly in the March quarter after shrinking slightly in the previous three months.

Friday, June 19th 2009, 8:44AM

by Jenny Ruth

BNZ's March quarter net profit shrank sharply, mainly due to a jump in its charges for impaired loans although net interest income also fell slightly.

BNZ's March quarter general disclosure statement shows its residential mortgages book grew by $458 million to $24.68 billion after shrinking $22 million in the December quarter.

Using Reserve Bank figures as a proxy for the market, its market share grew slightly from 15.6% to 15.7% over the three months.

The bank had a further $2.43 billion in mortgages off balance sheet at March 31, mainly loans approved but not yet drawn down, up from $2.16 billion at December 31.

Its mortgage book appeared to get slightly more risky in the latest quarter with its proportion of loans with loan-to-value ratios (LVRs) rising to 11.5% of the total book compared with 10.9% at December 31.

BNZ's net profit for the March quarter plunged 42.9% to $140 million from the same quarter a year earlier while impairment charges rose from $35 million in the December quarter to $64 million in the March quarter.

Total impairment charges in the six months ended March 2008 were just $30 million.

BNZ's second quarter net interest income fell 7.3% to $319 million from the year-earlier quarter. The banks net profit for the six months ended March was down 3.8% but its net interest income for the period was up 3.4%.

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