HSBC's mortgage book shrinks but profits jump

The Hong Kong & Shanghai Banking Corp's New Zealand branch's mortgage book continued to shrink during the June quarter but its profitability jumped sharply.

Monday, October 5th 2009, 3:47PM

by Jenny Ruth

The bank's latest general disclosure statement (GDS) showed net profit jumped 34.4% to $12.7 million in the three months ended June, taking net profit for the six months ended June to $25.8 million up 86.4% on the same six months a year earlier.

The quarterly increase was despite a $1.2 million increase in charges against profit for impaired loans, taking such charges for the six months to $4.4 million compared with $3.2 million in the same six months a year earlier.

HSBC's mortgage book shrank to $1.04 billion at June 30 from $1.11 billion three months earlier and from $1.25 billion at June 30 last year. The bank's interest income from total advances to customers shrank to $116.7 million in the six months ended June from $175 million in the previous first half but its interest expense also dropped to $96.2 million from $217 million previously.

The bank's total assets also shrank to $5.26 billion at June 30 from $6.36 billion a year earlier but net assets rose to $25.6 million from $20.2 million.

HSBC's GDS was the last of the home-lending banks to be lodged. Total mortgage lending by those banks grew $2.01 billion to $151.88 billion in the June quarter. That's a significantly different figure from the $159.07 billion reported by the Reserve Bank, which put the quarter's growth at just $1.77 billion.

The GDS figures show all four of the largest banks lost market share during the quarter with the largest, ANZ National Bank and ANZ's New Zealand branch, share slipping from 33.32% in March to 32.89% in June. That's down from 34.05% in June last year.

The smaller banks, with the exception of HSBC, all gained market share, the stand-out being the government's Kiwibank whose share jumped from 4.67% in March to 5.13% in June. Kiwibank's market share in June last year was 3.51%.

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