BNZ's asset quality under pressure
Bank of New Zealand’s asset quality is under pressure with the recession accelerating during the December quarter with unemployment rising, investment falling and business and consumer confidence at historic lows, its parent, National Australia Bank has warned.
Tuesday, February 10th 2009, 10:56PM
by Jenny Ruth
Growth in lending volumes continued to slow in the quarter and higher funding costs are putting pressure on profit margins, compounded by the costs of the government’s guarantee scheme, but "ongoing repricing initiatives are assisting asset margins," NAB says.
BNZ’s ratio of loans more than 90 days overdue to total loans blew out to 87 basis points at December 31 from 54 points at September 30, NAB, which is now headed by former BNZ boss Cameron Clyne, said in its December quarter trading update.
"There is a continued focus on cost efficiency through process improvement," Clyne said.
BNZ’s September quarter general disclosure statement showed total impaired assets at September 30 were $201 million, $140 million of that business loans, $60 million in mortgages and $1 million from other retail lending. That’s out of $52.12 billion in gross loans. BNZ’s on-balance sheet residential mortgages totaled $24.24 billion at September 30 with another $2.13 billion off-balance sheet, mostly loans approved but not drawn down.
Impaired assets a year earlier totalled less than half at $62 million with $38 million in business loans, $18 million in mortgages and $6 million in other retail lending out of a $47.43 billion total loan book.
The September GDS showed 11.4% of BNZ’s mortgage book had loan-to-value ratios (LVRs) above 80% at September 30 while 36.9% of its book had LVRs below 60%.
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