BNZ barely profitable in quarter

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Bank of New Zealand was barely profitable in the September quarter, partly reflecting increased charges for bad loans, and its mortgage book grew sluggishly.

Wednesday, December 9th 2009, 10:38PM

by Jenny Ruth

BNZ's latest general disclosure statement (GDS) shows net profit for the three months ended September was just $2 million compared with $196 million in the corresponding period last year.

That took BNZ's net loss for the year ended September to $181 million compared with a $785 million net profit the previous year, reflecting the $661 million provided in its June quarter result for the structured finance tax case it lost. BNZ is appealing the tax case.

Charges against profit for bad loans rose $48 million in the September quarter, bringing charges for the year to $190 million. Net interest income fell 2.8% to $316 million.

BNZ's mortgage book grew by $196 million to $25.31 billion during the September quarter after climbing $637 million in the June quarter.

Using Reserve Bank figures as a proxy for the mortgage market (which don't match well with the GDS figures but which are the only figures available until all the banks have lodged their GDSs), BNZ accounting for only 12.8% of new lending by registered banks in the September quarter.

That meant its market share slipped slightly to 15.88% from 15.91% in June.

BNZ had a further $2.19 billion in off-balance sheet mortgages at September 30, mortgages approved but not drawn down, compared with $2.28 billion at June 30.

Its mortgage book appeared to get less risky in the latest quarter with its proportion of loans with loan-to-value ratios (LVRs) above 80% falling to 10.3% from 11.7% at June 30.

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