Banks cash in on house boom
New Zealand's five big banks made bigger profits because of the booming housing market last year but growth in profitability may slow this year.
Tuesday, May 4th 2004, 6:19PM
by The Landlord
That is because rising interest rates and outward migration are expected to reduce the volume of house sales in 2004.The yearly KPMG Financial Institutions Performance survey shows the underlying profits of the big five rose to $4.2 billion in 2003, excluding one-off items and accounting adjustments, from $3.75 billion in 2002.
Including one-off items and adjustments, net profit after tax for the five was $2.46 billion in 2003, 10.5 per cent lower than the 2002 profit of $2.74 billion.
The banks' fortunes in 2003 were dominated by the real estate market. Rising house prices were by far the biggest driver of a growth in lending.
The big five, now all Australian-owned, were owed a total of $83 billion in home loans in 2003, up nearly 14 per cent, or $9.7 billion, on the $73.3 billion in 2002.
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