By Gareth Vaughan
Westpac New Zealand, which grew lending faster than its big three rivals in the year to September last year, recorded a tiny rise in both housing loans and total gross loans in the December quarter.
Westpac's latest General Disclosure Statement (GDS) shows housing term loans grew by just NZ$53 million in the quarter to NZ$34.3 billion, less than non-housing loans which grew by NZ$68 million to NZ$13.45 billion. The bank's total gross loans rose by NZ$58 million to NZ$50.82 billion.
Westpac, which this week launched a "Grow New Zealand" campaign in an attempt to kick start lending, is the first of the big four banks to release its December quarter GDS. In the September year Westpac grew gross loans by NZ$2 billion with its growth in business lending, agricultural lending and mortgage lending all outstripping the overall market.
Westpac CEO George Frazis told interest.co.nz last November that an economic downturn was the right time to be growing lending because you were supporting the recovery.
"It's actually the right time to be growing (lending) in a down market because cash flows are known, values are down so it's not as if there's any inflation of value," said Frazis.
"So when you've got a solid business, a solid proposition by a personal customer, you know that's a bankable proposition. So it's all about being open for business and that's what we've been," Frazis said then.
In contrast to Westpac's lending growth, the ANZ's gross loans in the September fell by NZ$545 million and ASB and BNZ both recorded small drops in gross lending. State owned Kiwibank, however, grew lending by NZ$1.6 billion in the September year to NZ$10.7 billion.
Mortgage credit drops
Westpac's lending slowdown comes as the latest Reserve Bank sector credit data shows mortgage lending fell in December, month-on-month, for the first since the central bank started collecting the data in June 1998. The Reserve Bank says mortgage credit fell by NZ$50 million to NZ$170.95 billion in December from NZ$171 billion in November. That's the first monthly absolute dollar decline. The previous low was an increase of NZ$101 million from September to October last year.
And the Real Estate Institute of New Zealand's latest monthly statistics show the volume of house sales at their lowest point in January since those records began in January 1992. Meanwhile, Kiwibank yesterday launched its second "limited time only" mortgage rate cut for 2011 as it strives to kick start the mortgage market.
Meanwhile, Westpac recorded unaudited profit after income tax of NZ$95 million for the three months to December last year, more than double the NZ$42 million it made in the same period of 2009.
Net interest income rose by NZ$24 million, or 8.4%, to NZ$309 million and impairment charges on loans more than halved to NZ$57 million from NZ$125 million. Net operating income rose NZ$20 million, or by 5.5%, to NZ$383 million and operating expenses rose NZ$12 million, or 6.7%, to NZ$190 million.
The bank's total assets rose by NZ$1.1 billion largely due to rises in the value of trading securities and assets due from related entities.
Total past due assets rose to NZ$2.2 billion from NZ$2.1 billion at September 30. PricewaterhouseCoopers recent bi-annual Banking Perspectives report noted the big five banks still have significantly more past due loans on their books than they did before the Global Financial Crisis.
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8 Comments
Would be interesting to see the results from the other aussie banks General Disclosure statment to see how they have grwon or shrink in the December quarter. Still they made a good profit for the quarter with all the kiwi's hard earned cash going over to Australia.
"Chief executive Sam Knowles says up to $500 million of new overseas borrowing is planned to support new lending to customers." You mean like the interest component , Tranny,that goes 'overseas' from some of Kiwibanks liabilities ?
http://www.radionz.co.nz/news/top/54604/kiwibank-plans-up-to-$500m-new-overseas-borrowing
"Frazis told interest.co.nz last November that an economic downturn was the right time to be growing lending because you were supporting the recovery."
What he was thinking was an entirely different matter and went like this.....
"""...this downturn looks to have a,ong way to go.....don't think I'll be borrowing any time soon....economy is stuffed anyway....must find another sucker......"""""
I'm up with the play, Tranny! Are you going to tell me that Kiwibank has repaid the $500m overseas drawdown since Sam stepped down? If so, what have they replaced it with? And Westpac's off-shore liabilites, and the other foreign owned banks, are what is supporting our economy. We do not have the savings base to run New Zealand, otherwise. Take away their support, and see how well Kiwibank can do. Probably on a par with its predecessor, the BNZ, when it was a 'kiwi' bank. Remind me again...how many times was it bailed out by we the New Zealand taxpayer? And who eventually rescued the pathetic remnants of our locally owned operation? The NAB; the Aussies saved our bacon...yet again, from their Head Office, yes, in Australia.
Ah yes we are saved by the australian banks getting a possible downgrade in their credit ratings which means they pay more interest for their borrowing and then we pay more in interet on our loans. Meanwhile Kiwibank with its lower credit rating has provided lower rates and fees to kiwis. The Aussies saving our bacon, more like eating off the pigs back it you ask me.
If the Australian banks get a significant credit downgrade, that will be the death knell for Kiwibank. Why? Because if the wholesale cost of money then rises, and it is passed on to mortgage holders here, ( almost a certainty) the property market here will collapse under the weight of investor market default - it probably will in any case. In those circumatances, Kiwibank, with its overweighted dependency on domestic mortgages will head, first with its bleeding hands open to the Government for support, and in the absence of that support ( the Government will have other, more pressing priorites to deal with) they will be forced to do a "BNZ" and find a stratigic rescue partner. Aussie bank downgrades ?...Kiwibank better hope not!
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