BNZ grows June quarter lending confirming split between big banks with record profits and those lifting lending

By Gareth Vaughan

The Bank of New Zealand's latest General Disclosure Statement (GDS) confirms that BNZ and Westpac are the two big four banks growing lending while ASB and ANZ notch, or head towards, record annual profit.

BNZ's GDS for the nine months to June shows its total gross loans up NZ$446 million in the three months to June 30. That means BNZ grew gross loans by NZ$1.2 billion in the first nine months of its financial year against a backdrop of anemic systems credit growth.

Based on the Reserve Bank's sector credit data, in the same nine month period, total agriculture sector debt fell NZ$783 million, business sector debt rose NZ$1.4 billion and total household claims, including housing loans and consumer credit, rose NZ$1.57 billion.

However, for the June quarter BNZ's gross lending growth was pipped by Westpac, which registered a NZ$576 million increase. In contrast ANZ's gross loans contracted by NZ$756 million, and although ASB's June disclosure statement is not yet available, if its lending grew at all, it's unlikely to be significant growth given the bank's recent annual results recorded a 1.2% contraction in lending.

The bulk of BNZ's quarter lending growth appears to have come from home loans with housing loans up NZ$334 million to NZ$27.077 billion and other term lending down NZ$27 million to NZ$25.637 billion.

Record profits versus lending growth

BNZ, owned by the National Australia Bank, recorded a NZ$131 million net profit after tax for the three months to June. Although that was down from a NZ$161 million profit in the same period of last year, BNZ's 2010 figures were distorted by the inclusion of the unused portion of a provision made before it settled its structured finance transaction dispute with the Inland Revenue Department. This meant BNZ paid just NZ$4 million of income tax in the nine months to June 30, 2010.

With its unaudited net profit for the nine months to June at NZ$386 million, BNZ's September year profit is unlikely to exceed the heights of 2008 when it posted annual profit of NZ$785 million. That's in contrast to ASB, whose June year profit was a record breaking NZ$568 million, topping its previous record of NZ$532 million it managed in 2007 by 7%.

Meanwhile, ANZ is on track for record annual underlying profit - which excludes non-cash and significant items - after delivering NZ$916 million in the nine months to June, just NZ$60 million shy of 2007's record NZ$975 million. ANZ's nine month net profit after tax was NZ$735 million after a one-off NZ$102 million charge stemming from the group's move to a single core banking system. The bank's September 2007 year net profit was NZ$1.039 billion.

However, Westpac, like BNZ, appears unlikely to see its annual profit reach record levels. Westpac's profit after tax for the nine months to June was NZ$287 million. In the year to September 2008 it managed NZ$562 million.

BNZ's GDS also shows a NZ$162 million dividend in the June quarter, taking total dividends for the nine months to June to NZ$330 million, well down on NZ$563 million for the same period last year.

BNZ grew total assets NZ$800 million to NZ$69.468 billion in the quarter and total liabilities NZ$838 million to NZ$65.436 billion, with term deposits up NZ$307 million to NZ$18.814 billion. Total impaired assets fell NZ$98 million, or 12%, to NZ$732 million and 90 days past due assets fell NZ$2 million to NZ$263 million.

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