BNZ's mortgage book, profitability grew strongly in Dec qtr

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Bank of New Zealand's mortgage book grew strongly in the December quarter, as did its underlying profitability.

Tuesday, February 22nd 2011, 9:05PM

by Jenny Ruth

BNZ's December quarter general disclosure statement (GDS) shows its mortgage book, using the same capital adequacy-based measure GoodReturns has used since December 2002, grew by $172 million to $26.42 billion.

Wesptac's change in how it calculates its equivalent figures will mean these December quarter figures for all banks will be so distorted as to be meaningless but, unlike Westpac, other measures of BNZ's mortgage book are reasonably consistent.

Its note on "loans and advances to customers" show its mortgage lending at $26.43 billion at December 31, up $170 million from $26.26 billion at September 30.

BNZ's loan-to-valuation ratio (LVR) breakdown, which it says includes loans to businesses wholly or partly secured by mortgages, shows a $202 million rise to $27.67 billion for the quarter.

Reserve Bank figures, which often don't marry at all well with figures derived from all the home-lending banks' GDSs, show all bank lending on housing grew $422 million in the December quarter. Based on those figures, BNZ accounted for 40.8% of new mortgage lending in the three months. Its actual market share at September 30 was 16.5%.

BNZ's LVR figures show lending with LVRs above 80% little changed at 10.9% of its mortgage book.

The bank's net profit for the quarter fell to $150 million from $271 million in the same quarter a year earlier but the year-earlier figures included a $143 write-back of tax charges on BNZ's structured finance transactions.

Pre-tax profit was up 18.1% to $2.15 million, reflecting a 7.4% rise to $334 million in net interest income, while charges against profit for bad loans eased to $39 million from $43 million in the year-earlier quarter.

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