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Bank margins trimmed: KPMG

KPMG says mortgage lending is arguably the most competitive part of the financial services industry in New Zealand.

Tuesday, May 1st 2001, 2:24PM

by Jenny Ruth

Housing construction may remain sluggish, but mortgage lending continues to dominate New Zealand bank’s lending profiles, according the KPMG’s latest annual survey of financial institutions.

Mortgage lending in 2000 grew by $2.7 billion and makes up 47% of the total lending by New Zealand registered banks and 37% of lending by international banks which operate branches here.

"The mortgage lending market is arguably the most competitive in the New Zealand financial services industry, given the number of participants involved," KPMG says.

"The wider financial services industry, not just registered banks, is actively involved in mortgage lending and accordingly this segment of the retail banking market will continue to be intensely competitive."

Statistics New Zealand figures released yesterday showed that although new housing permits rose from 1,397 in February to 1,762 in March, in seasonally-adjusted terms they were down 1.2%

The government statistician said the trend in housing permit numbers has been flat for the last few months after falling sharply between August 1999 and November 2000.

KPMG’s survey also shows that although Deputy Prime Minister Jim Anderton may rail at the foreign-owned banking sector for making profits at the expense of New Zealanders, the survey shows bank profit margins here are slim by international comparisons.

The weighted average interest margin, the difference between what banks pay for deposits and what they collect from loans, fell 13 basis points to just 2.31% during the year, its lowest level since KPMG began tracking margins 11 years ago.

The domestic picture is somewhat distorted by the much lower margins earned by most bank branches in New Zealand which mostly operate in the wholesale sector. Bank branches, excluding WestpacTrust, saw their margins contract from 0.9% in 1999 to 0.7% in 2000.

Registered banks and WestpacTrust saw their margins dip from 2.6% in 1999 to 2.57% in 2000.

Still, that’s also low by international comparisons. In Australia, the average margin is 2.9%, in Britain 2.7% and in the US 3.3%.

Despite that, New Zealand registered banks as a whole improved their underlying performance by 16% and their net profit by 7% to $1.7 billion.

The survey also shows the New Zealand banks continue to be useful investments for their mostly Australian parents, although not quite as good as in 1999. The return on net assets of New Zealand banks of 22.5% compared with 18.5% for their Australian counterparts in 2000. In 1999, the New Zealand banks returned 24.5% compared with 17.3% for their Australian counterparts.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 ▼6.75 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 ▼6.75 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 8 April 2024 9:21am

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