BNZ's March Qtr new mortgage growth slowest in two years
National Australia Bank-owned Bank of New Zealand appears to have held its own in the mortgage market during the March quarter although its net new mortgage growth slowed to its slowest pace in two years.
Wednesday, May 23rd 2012, 12:44PM
by Jenny Ruth
The first of the banks to lodge its disclosure statement for the March quarter, BNZ's mortgage book grew by $179 million to $27.79 billion in the three months, based on its loan-to-valuation ratio (LVR) tables.
While BNZ's figures before the December 2010 quarter may not be strictly comparable, but it's clear that's its smallest quarterly inflow since the March 2010 quarter when, based on its capital adequacy data, it took in a net $126 million.
The latest inflow compares with the $227 million in net new mortgages in the December 2011 quarter, the $305 million in the September 2011 quarter and $337 million in the June 2011 quarter.
Reserve Bank figures show net new mortgage lending by registered banks grew $1.28 billion in the three months ended March. If that's an accurate proxy for the figures in banks' disclosure statements - and it hasn't been that great a proxy lately, that would mean BNZ accounted for 14% of net new lending in the quarter, although its market share remained steady at 16.2%. BNZ's market share had been increasing in recent quarters.
As in the previous quarter, BNZ's figures suggest much of its mortgage book growth has come from relaxed lending criteria. Of the growth in the quarter, $75 m was from mortgages with LVRs below 80%, $45 million from mortgages with LVRs between 80% and 89% and $59 million from mortgages with LVRs above 90%.
BNZ's net profit for the three months ended March dropped 40% to $63 million, reflecting unrealised losses on financial instruments which also distorted its December quarter profit outcome. Net interest income grew 14.1% to $389 million in the March quarter, up from the 7.2% growth in the December quarter.
Charges against profit for bad loans eased to $27 million in the latest quarter from $56 million in the year-earlier March quarter.
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The OCR ain't going anywhere
The new Reserve Bank governor, Graeme Wheeler, predicts that the official cash rate won't by going anywhere until 2014.
This is clear from the 90-day bank bill forecast graph in the December Monetary Policy Statement. It shows clearly how over the past year forecast increases kept getting pushed down each quarter.
A year ago the bank was predicting the 90-day bill rate would be up at 4.00% by March 2014. That forecast was wound back to 3.3% in March, 3.2% three months later and is now down at 2.8%.
The good news for borrowers is that, asssuming things pan out as forecast, then home loan rates aren't likely to be going up any time soon either.