BNZ sees growth in mortgage book

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BNZ grew its mortgage book strongly during the June quarter although non-cash losses reduced its profitability.

Monday, August 29th 2011, 10:14AM

by Jenny Ruth

BNZ's June quarter disclosure statement shows its mortgage book, using the same capital adequacy-based measure www.goodreturns.co.nz has used since December 2002, grew by $337 million to $27.07 billion in the three months, slightly faster than the $314 million growth shown in the March quarter.

Another measure of its mortgage book, BNZ's note on loans and advances to customers, showed a similar figure of $334 million growth in the June quarter, up from $311 million in the March quarter.

Its loan-to-valuation ratio (LVR) table, which includes off-balance sheet mortgages such as loans approved but not drawn down, stood at $29.79 billion, up $348 million in the three months.

While Reserve Bank figures on mortgage lending have a poor correlation to the figures disclosed in banks' quarterly disclosure statements, they show mortgage lending by registered banks grew by $878 million to $168.4 billion in the June quarter compared with $472 million in the March quarter.

If the central bank's figures could be relied upon, that would put BNZ's market share at 16.08% at June 30, up from 15.96% at March 31, using the capital adequacy-based measure.

BNZ's actual market share, based on all the bank's on-balance sheet figures, at March 31 was 15.95%.

BNZ's net profit for the June quarter fell 18.6% to $131 million while profit for the nine months ended June was down 33% at $386 million.

However, the results were distorted by one-off tax write-backs in the year earlier figures and by a $45 million loss on the fair value of financial instruments in the latest quarter compared with a $56 million gain in the year-earlier quarter.

Net interest income actually rose 7.7% to $350 million for the quarter and by 8.2% to $1.03 billion for the nine months.

BNZ's charges against profit for bad loans fell sharply to $19 million in the latest quarter from $47 million in the June quarter last year. These charges for the nine months ended June fell to $114 million from $135 million.

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