ANZ's profit rises but mortgage book stalls

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ANZ Bank reported net profit surged in the December quarter although its mortgage book was barely changed.

Friday, February 26th 2010, 4:10PM

by Jenny Ruth

The general disclosure statement (GDS) for the New Zealand branch ANZ established in January last year, which shows the overall position of the bank's New Zealand operations, showed a 51.5% jump to $253 million in net profit for the three months ended December 31, although New Zealand chief executive Jenny Fagg says underlying profit fell 19%.

While ANZ's press statement said it made $2.5 billion in new home loans during the December quarter, that is a gross figure which doesn't take account of repayment of existing loans.

The capital adequacy statement in the branch GDS shows the mortgage book for the overall group fell $85 million. However, the branch's mortgage book alone rose $872 million to $9.62 billion after the subsidiary, ANZ National Bank, sold it a further $1.74 billion in mortgages during the quarter.

ANZ National's mortgage book shrank $824 million to $41.08 billion, according to its capital adequacy statement. The numbers are distorted by the fact the ANZ branch reports using Basel 1 rules while ANZ National's accounts use Basel 11 rules.

GoodReturns has historically used the capital adequacy figures to track ANZ's share of the mortgage market. However, according to the note on loans and advances in the branch GDS, the overall mortgage book grew just $22 million to $53.48 billion

But whichever set of number one chooses, while ANZ remains New Zealand's largest home lending bank, its market share shrank from the 32.85% it held at September 30.

According to Reserve Bank figures net new lending by registered banks increased $1.55 billion during the December quarter.

The ANZ branch, which was created to get around Australian prudential rules preventing an Australian bank from lending more than 50% of its equity to a subsidiary, shows the percentage of the mortgage book with loan-to-valuation ratios (LVRs) above 80% fell to 22.4% at December 31 from 23.5% at September 30.

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