Across all the banks, the net interest margin increased two basis points to 2.26%. Westpac and The Co-Operative Bank had the biggest increases in the quarter, of nine basis points and twenty eight basis points respectively.
Only BNZ, TSB and SBS reported a decrease.
The report noted that fixed lending rates had started to increase and there had been a reduction in the cost of funds.
It said the intense rate competition for residential mortgages had softened, although banks were still offering sweeteners such as iPads and TVs in the period the report looked at. Those incentives have also dried up, with the introduction of the Reserve Bank’s speed limits on low-deposit lending.
CA and TSB showed the strongest levels of loan growth, 7.58% and 6.93% annually, respectively. Heartland was the only bank surveyed that saw its loan book decrease. ANZ had a clear majority of loans, even though its gross loans only increased 1.15% over the quarter or 3.45% over the year.
Net profit after tax for the banks surveyed increased $52 million, or 5.4%, in the quarter. Net interest income was up 1.57%.
The increase in interest and non-interest income was only partially offset by increases in operating expenses and impaired asset expenses. The report said the increase in operating expenses was driven by CBA and Kiwibank, and was likely down to technology innovations the banks were working on.
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