ANZ's mortgage book continues to shrink

The loan-to-valuation ratio (LVR) table in ANZ Bank's latest disclosure statement covering all its New Zealand operations shows its mortgage book shrank by $148 million to $51.02 billion in the three months ended December 31 after shrinking $162 million in the September quarter.

Using Reserve Bank figures as a proxy for mortgage lending by registered banks, that suggests ANZ's market share fell to 30% at December 31 from 30.3% three months earlier.

The LVR table is where GoodReturns now derives its mortgage data because it is the one consistent measure across all banks but, in ANZ's case, it only began disclosing this information from the June quarter of 2011.

However, its note on loans and advances, which has a lengthy history, shows ANZ's mortgage lending has been declining since March last year. It fell $253 million to $53.44 billion in the December quarter, this note shows, and has dropped $589 million since March 31.

Broadly, ANZ has been losing market share since its 2003 takeover of National Bank although it remains New Zealand's largest home lending bank by a significant margin.

Various banks and mortgage brokers have commented recently on how competitive the mortgage market has become lately, and ANZ's offerings, such as its promise of $1,000 to everyone who takes out a homeloan, are being heavily advertised.
The evidence of whether ANZ is also relaxing its credit criteria is mixed.

Most of the decline in ANZ's mortgage book was in loans with LVRs above 90% - they fell by $270 million to $4.36 billion.

However, its loans with LVRs below 80% fell by $45 million to $40.12 billion while those with LVRs between 80% and 90% rose by $167 million to $6.55 billion.

ANZ's New Zealand chief executive, David Hisco, says retail customers are increasing their deposits rather than taking on new debt amid continuing pressures on the New Zealand economy. Nevertheless, he sees positive signs for the economy.

The bank's net profit for the three months ended December rose 59.6% to $415 million, although that largely reflected non-cash revaluation gains. Hisco says underlying profit rose 17%.

Net interest income rose 4.6% to $678 million in the quarter while income from funds management and insurance - ANZ owns OnePath - jumped 46.2% to $82 million.

Offsetting those improvements, charges against profit for bad loans rose to $46 million from $34 million in the year-earlier quarter, but most of that growth was from business loans.

Comments from our readers

On 1 March 2012 at 10:57 am Glenn said:

"....mortgage book shrank by $148 million to $51.02 million in the three months ended December 31..." should be $51.02 billion?

On 1 March 2012 at 10:58 am ian said:

I think there should be some billions where the millions are in there.....if the ANZ book is $51m they're in trouble

On 1 March 2012 at 1:49 pm CP said:

Mr Hisco is living in la la land based on the ANZ National's reluctance to give 95% loans (apart from the odd few) to the market. They are losing customers daily because of this. The bank CEO seems to be taking the moral high ground (on Stuff website) questioning whether it is prudent to lend to people at 95% with interest rates likely to go up. They are happy however to peddle high interest credit cards, overdrafts and personal loans to all and sundry. He should also visit his banks' broker units to discover they have probably the most conservative mortgage servicing calculator in the market with not only a 20 year calculation term but also a highish interest rate used in the calculation. Lets also factor in a health low equity fee charged to clients.
So whilst the percentage deposit is a major factor, the same challenges face every borrower (and lender) in the market when the interest rates rise, regardless of equity in the property.

On 1 March 2012 at 5:15 pm Amused said:

Well said CP. I am sure most mortgage brokers (and lenders) would agree with your comments above. Mr Hisco might well find his mortgage book shrinking even further once ANZ kill off the National Bank brand. I predict that plenty of National bank customers with home loans will want to refinance if given a good enough offer by the other banks. Watch this space...

ANZ's mortgage book continues to shrink

ANZ Bank's profit rose strongly in the December quarter but its mortgage book shrank for a third successive quarter.

Thursday, March 1st 2012, 6:46AM 4 Comments

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