HSBC NZ mortgage book contracts as profit is boosted by fee income, including from its parent

By Gareth Vaughan

HSBC New Zealand, which targets wealthy customers with the lowest fixed mortgage rates advertised by any bank, saw its mortgage book shrink in the December quarter by almost NZ$5 million.

The bank's latest General Disclosure Statement shows its residential mortgage book sitting on NZ$981.4 million at December 31, down from NZ$986 million at September 30. The drop comes after a NZ$46.1 million increase in the September quarter.

Through its "Premier" loans HSBC offers the lowest advertised fixed interest rate by a bank for six months at 5.49% per annum or 4.99% with insurance, one-year at 5.79%, and five years at 7.59%. However, its floating or variable rate, at 5.99% is above most of the other banks floating rates and these are what the majority of customers are currently choosing. See all bank mortgage rates here.

Since introducing Premier, its premium international banking service in New Zealand in October 2008, HSBC has been focusing on high net worth customers. Premier customers’ must have mortgages worth NZ$500,000 or savings of NZ$100,000 to qualify for a loan.

Meanwhile, HSBC's profit after tax for calendar year 2010 rose by NZ$5.5 million, or 11%, to NZ$56.2 million from NZ$50.7 million. The major contributor to the increase was a NZ$22.7 million, or 91%, jump in "other net operating income" to NZ$47.8 million.

This was boosted by a NZ$6.56 million, or 5%, rise in lending and credit facility fees to NZ$25.3 million, and NZ$12.1 million worth of "other commissions and fees" received from parent the Hongkong and Shanghai Banking Corporation Ltd compared with just NZ$415,000 in 2009.

The bank's fees and commission expense fell by NZ$4.7 million, or 45%, to NZ$5.7 million.

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