ASB's mortage book shrinks for a third successive quarter
ASB Bank's mortgage book shrank for the third successive quarter in the three months ended September but profitability rose on a surge in net interest income.
Monday, March 14th 2011, 12:09PM
by Jenny Ruth
ASB's December quarter GDS shows its mortgage book, using the same capital adequacy-based measure GoodReturns has used since December 2002, shrank by $187 million to $37.47 billion in the three months. It has shrunk by $439 million since March 31 last year.
Reserve Bank figures, which often don't marry well with GDS data, show all bank lending on housing grew $422 million in the December quarter.
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 the other three big banks, other measures of ASB's mortgage book are reasonably consistent.
It's loan-to-valuation ratio (LVR) table is identical to its capital adequacy-based figures, including its off-balance sheet exposures - GoodReturns has been counting on-balance sheet figures only. ASB's LVR table shows its total book shrinking $103 million to $42 billion in the quarter.
Only 3.8% of ASB's mortgage book had LVRs above 90%, unchanged from three months earlier, and the 9.6% of its book which had LVRs between 80% and 90% was also unchanged.
ASB doesn't break its note on advances to customers down into lending type, as some of the other banks do, but its note on asset quality shows its mortgage book at $37.49 billion, only marginally different from the capital adequacy-based figures. ASB didn't provide equivalent figures in its September quarter GDS.
While the Westpac changes mean GoodReturns can no longer provide believable market share percentages, ASB has been steadily losing market share in the mortgage market since September 30, 2008.
ASB's net profit jumped 16.7% in the quarter to $133 million but net interest income rose 30.4% to $322 million. The bottom line appears to have been dragged down by a fall in services and commission income, although that information wasn't provided in its September quarter GDS. In the six months ended December, services and commission income fell 15.1% to $185 million.
ASB's charges against profit for bad loans eased to $35 million compared with $50 million in the December quarter of 2009.
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