BNZ grows lending in the March quarter, in contrast to ASB and Westpac, by NZ$523 million

By Gareth Vaughan

The Bank of New Zealand (BNZ), in contrast to its rivals ASB and Westpac, grew its lending by NZ$523 million in the March quarter.

The bank's latest General Disclosure Statement (GDS) shows total gross loans and advances to customers rose NZ$523 million in the three months to March 31 this year to NZ$56.172 billion from NZ$55.649 billion at December 31 last year.

Over the same period ASB's GDS shows its advances to customers fell NZ$179 million to NZ$52.808 billion, and Westpac's total gross loans fell NZ$82 million to NZ$50.739 billion. ANZ is yet to release its New Zealand Branch GDS.

The BNZ's lending growth comes in a weak overall market. Reserve Bank sector credit data, which doesn't necessarily match the combined figures from the individual banks, shows agricultural debt down NZ$330 million during the March quarter to NZ$47.480 billion, business debt up just NZ$30 million to NZ$73.091 billion, and total household claims up NZ$472 million to NZ$183.419 billion.

BNZ's GDS shows the bulk of its growth came through housing loans, which rose NZ$311 million in the March quarter. Other term lending increased by just NZ$76 million, and overdrafts rose NZ$178 million to NZ$2.199 billion. Credit card balances and lease financing recorded small falls. In the December quarter BNZ grew total gross loans by NZ$272 million.

Deleveraging a feature

After the recent release of the bank's half-year results, CEO Andrew Thorburn told interest.co.nz that deleveraging had been a major factor in restraining the bank's net lending growth to businesses.

"Our business book has grown NZ$400 million in the half, but we lent NZ$1.2 billion of new money to business clients in that same period. So you can see the deleveraging that has occurred to bring it back to (a) NZ$400 million net (increase)," Thorburn said.

He also said it was time for businesses to back themselves, start to invest, start to "leverage their balance sheets sensibly," and BNZ wanted to support that.

Covered bond private placement offers floating rate interest

Meanwhile, the GDS also details the interest rate offered by a private placement of NZ$300 million worth of covered bonds BNZ issued during the March quarter. BNZ says it issued the covered bonds at a floating rate of 127 basis points over the New Zealand dollar three month bank bill rate. The eight year bonds mature on March 31, 2019.

So far the only New Zealand bank to issue covered bonds, BNZ has now raised NZ$2.57 billion from issuing them. Based on the Reserve Bank's policy allowing banks to use up to 10% of their total assets as collateral for covered bonds, BNZ can issue up to NZ$8.86 billion worth of covered bonds.  The bank had total assets of NZ$68.668 billion at March 31, up NZ$34 million from December 31.

The GDS also notes a NZ$168 million dividend paid to BNZ's parent National Australia Bank during the six months to March, less than half the NZ$380 million paid in the same period of the previous financial year.

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