ANZ loses market share in home loans

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[Updated] ANZ Bank's share of the mortgage market continued to slide in the September quarter although a marked drop in charges for bad loans boosted profitability.

Thursday, December 2nd 2010, 5:00AM

by Jenny Ruth

ANZ's September quarter general disclosure statement for its overall New Zealand operations show its total mortgage book grew by $139 million to $53.78 billion, leaving it by far the country's largest mortgage lender (the next largest, ASB Bank, had a $37.66 million mortgage book at September 30).

However, those figures aren't comparable with the figures reported by the other banks and are overstated because they are prepared under Basel 1 rules and include business loans secured by residential mortgages.

Combining figures for its subsidiary, ANZ National Bank, which are reported under Basel II rules like the other banks, and its New Zealand branch, which are reported under Basel 1 rules, to get a number which most closely matches the other banks', ANZ's mortgage book totalled $51.12 billion at September 30, up $228 million from June 30.

Using the latter figures and those of the Reserve Bank as a proxy for the mortgage market, ANZ wrote 28.4% of mortgages written by registered banks in the September quarter and its share of the market eased to 30.73% from 30.74% three months earlier.

Charges against profit for bad loans were only $48 million in the latest quarter compared with $351 million in the September quarter last year. Charges for mortgages gone bad were just $20 million compared with $79 million in the year-earlier quarter. Net interest income also jumped 17.7% to $744 million in the latest quarter.

That helped ANZ make a $247 million net profit for the quarter compared with a $284 million net loss in the September quarter last year. As previously reported, net profit for the year ended September was $867 million compared with $194 million the previous year.

At September 30, 20.1% of ANZ's mortgage book had loan-to-valuation ratios (LVRs) above 80% down from 20.8% three months earlier.

ANZ established its New Zealand branch in January 2009 to get around Australian prudential rules preventing an Australian bank from lending more than 50% of its equity to a subsidiary. Before that it operated solely through its subsidiary.

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