ASB's mortgage book shrinks for a fifth successive quarter

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Commonwealth Bank of Australia-owned ASB Bank's mortgage book shrank for a fifth successive quarter in the three months ended June although its profitability improved.

Friday, August 26th 2011, 9:44AM

by Jenny Ruth

ASB's June quarter disclosure statement shows its mortgage book (taken from the on-balance sheet portion of its loan-to-valuation ration table) shrank by $47 million to $37.41 billion in the three months. It has shrunk by $498 million since March 31 last year.

However, commentary in the report says: "Home loan market share is steady at 22.2%."

Because the three smaller home-lending banks have yet to report their June quarter results, ASB's current market share can't be calculated, although it was 22.35% at March 31.

According to Reserve Bank figures on mortgage lending, which historically have had a poor correlation to the figures disclosed in banks' quarterly disclosure statements, the mortgage market grew by $878 million to $168.4 billion in the June quarter and grew by $2.87 billion in the year ended June.

Of the five major banks including the government-owned Kiwibank, ASB and ANZ, the largest of the home lending banks, are losing market share while Westpac, National Australia Bank-owned Bank of New Zealand and Kiwibank are growing their mortgage books reasonably aggressively.

ASB's net profit climbed 9.3% to $153 million in the three months ended June and more than doubled to $568 for the year ended June. However, the increase in the annual result was boosted by a large one-off tax change in the previous year and pre-tax earnings were up a much more modest 7.8%.

However, net interest income jumped 18.4% to $322 million for the quarter and was up 22.5% to $1.27 billion for the year.

Rather than weighing on profit, ASB reversed $8 million in previous charges for bad loans in the quarter, taking the annual charge to $72 million, down from $125 million the previous year.

« Bad loans depress Kiwibank profits

BNZ sees growth in mortgage book »

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