Kiwibank still growing mortgage book but momentum wanes

By Jenny Ruth

Thursday 19th August 2010

Kiwibank continues to grow its mortgage book at a much faster pace than its market share but its momentum continues to wane.

Kiwibank's latest general disclosure statement (GDS) shows its mortgage book grew by $300.7 million in the three months ended June to $9.66 billion.

That compared with the $364 million growth it achieved in the March quarter which was its smallest quarterly increase since the June quarter of 2008 when its mortgage book grew $250 million.

Over the year ended June 30, its mortgage book grew by $1.87 billion.

Using Reserve Bank figures as a proxy for the market (actual figures won't be available until all the home lending banks have lodged their June quarter GDSs and Kiwibank is the first to lodge its GDS), Kiwibank's share of mortgage lending by registered banks rose to 5.87% at June 30 from 5.72% at March 31.

Kiwibank's continued growth is obviously coming at a cost to profit since its June quarter net profit fell 57% to $10.1 million, taking net profit for the year ended June to $45.8 million, down 27.9% from the previous year's $63.6 million.

The year-earlier result included an $11.1 million one-off gain from selling assets to another subsidiary of its parent, New Zealand Post.

Kiwibank's net interest income fell 26.7% to $33.3 million in the latest quarter while its charge against profit for bad loans rose to just below $5 million compared with $4.6 million in the same quarter a year earlier.

Of its total mortgage book, 20.3% had loan-to-valuation ratios (LVRs) above 80% at June 30, down slightly from 20.4% three months earlier, while those with LVRs above 90% eased to 6.8% from $7.5%.

Of the loans with LVRs above 90%, $270 million are government-backed Welcome Home Loans and the rest of its loans with LVRs above 80% are covered by mortgage insurance.

Kiwibank's average home loan balance at June 30 was $148,000 compared with $142,000 a year earlier.

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