Its latest disclosure statement shows Kiwbank's mortgage book grew by $260 million to $11.21 billion in the three months ended December, down from the $318 million growth in the September quarter and the $305.4 million growth in the June quarter.
“Front-end growth is actually increasing,” says chief executive Paul Brock. “We're seeing more debt repayment which is impacting the book.”
As the mortgage book matures, Kiwibank would expect to see more of its home loans amortising but the major impact is due to people reducing debt, he says.
Kiwibank's growth isn't just coming from market growth but reflects people switching from other banks, Brock says.
Reserve Bank figures on mortgage lending by registered banks bear that out. Kiwibank accounted for 20.3% of net mortgage lending in the December quarter while its market share at December 31 was just 6.6%.
Kiwibank's mortgage lending growth doesn't appear to be coming from any significant loosening of credit criteria. Its loans with loan-to-valuation ratios (LVRs) above 80% eased to 18.2% of its total book at December 31 compared with 18.5% at September 30.
Kiwibank's net profit for the three months ended December rose to $20.3 million from $5.2 million in the same quarter a year earlier, taking its six months result to $37.9 million, up from $13.9 million in the same six months of 2010.
That reflected 37% growth in net interest income for the December quarter and 38% for the six months ended December to $123 million while charges against profit for bad loans halved to $10 million for the quarter from $21 million in the year-earlier quarter and fell to $18 million for the six months from $31 million in the same six months of 2010.
Kiwibank's net interest margin increased from 142 basis points to 169 basis points.
Brock says much of the improvement reflects more and more people opting for higher-margin floating rate mortgages, although it also reflects some people opting for lower rate deposits. “They're not all sitting in high interest term deposits,” he says.
