Kiwibank, BNZ residential mortgage growth in hotly contested June quarter left trailing in ANZ NZ's wake

State owned Kiwibank achieved slightly stronger growth than BNZ in the hotly contested residential mortgage market in the June quarter but both banks were left trailing in ANZ New Zealand's wake.

The three banks are the only ones so far to have released general disclosure statements covering the three months to June 30 when banks battled hard for home loans in a low growth market by cutting advertised - or carded - fixed rates, offering significant discounts to advertised rates, paying cash incentives, and in some cases even paying break fees for other banks' fixed mortgage customers in order to win their business.

Based on the loan-to-valuation (LVR) tables in disclosure statements out today, Kiwibank grew residential mortgage lending by NZ$198 million and BNZ grew by NZ$156 million. ANZ NZ, including the ANZ and National banks, issued its disclosure statement on Monday  showing NZ$1.09 billion quarter-on-quarter growth.

Reserve Bank sector credit data shows housing loans up NZ$1.545 billion to NZ$175.789 billion in the June quarter, or about 0.88%. The banks' disclosure statement figures doesn't necessarily match the Reserve Bank data exactly.

Kiwibank's growth was perhaps lower than expected given it previously said it had lent more than NZ$200 million through one special 4.99% one-year fixed offer alone during the quarter, with about half of this to new customers.

Deleveraging still a feature

Speaking to journalists after Kiwibank announced record annual profit of NZ$79.1 million today, CEO Paul Brock said the business secured through Kiwibank's promotional offers doesn't always come straight through, with people switching over an extended period. Deleveraging remained a factor too.

"We continue to see more people paying back debt overall and that is a reasonable component in terms of whether we're growing on a net basis," Brock said.

"We're seeing a lot more repayment of debt in the market and so that makes it a bit more challenging in the net figures," said Brock.

"The other thing we're also seeing is clearly with the Christchurch earthquake some of our customers that were in the red zone have seen full pay backs of their mortgages. So we're seeing some of that coming through and obviously you will see those customers, in theory once the rebuild starts, continue to draw-down mortgages so we should get that back."

ANZ NZ's head of retail banking, Kerri Thompson, told interest.co.nz in a recent Double Shot interview that her bank's mortgage market share growth was coming after it had increased training for front line staff and changed some processes making things easier for both customers and staff.

ANZ NZ has also had a long running NZ$1,000 cash back offer and anecdotally has at times been generously contributing towards the likes of customers' legal and valuation fees, and in some cases paying break fees to win fixed mortgage customers off other banks.

Meanwhile, the June quarter figures show BNZ grew residential mortgages with LVRs both between 80% and 89% and over 90%. Both ANZ and Kiwibank grew in the 80% to 89% range but fell over 90%.

As of June 30 ANZ NZ's residential mortgage book stood at NZ$52.551 billion, excluding NZ$7 billion of off-balance sheet loans which include unutilised limits and approved loans not yet drawn. BNZ's stood at NZ$27.941 billion (excluding NZ$2.8 billion off-balance sheet), and Kiwibank's at NZ$11.632 billion.