Mortgage advisers approach half of BNZ's new lending

The amount of loans mortgage advisers are bringing to Bank of New Zealand continues to rise sharply, although they contributed slightly less to new lending in the six months ended September than they did in the six months ended March.

BNZ's annual results show mortgage advisers accounted for 48.1% of new business in the September half year, down from 43.8% in the March half, but well up on the 34.3% in the September half last year.

Broker-originated loans now account for 34.8% of BNZ's mortgage book, up from 32.7% at March 31 and 30.7% in September 2022.

BNZ's parent, National Australia Bank, (NAB) said BNZ's share of housing lending in NZ rose to 16.6% at Sept 30 from 16.3% a year earlier.

Chief executive Dan Huggins said in a statement that nearly 5,000 home loan customers switched to BNZ from other banks in the latest year, contributing to the 5.3% increase to $57.7 billion in mortgage lending.

BNZ tried to play down its profit result by saying it fell 12.5% in the second half.

But that was in comparison to the first half and the second half result was essentially flat at $704 million, just $1 million lower than in the previous first half.

That small decline mostly reflected a significant uptick in charges for bad debts from $79 million at March 31 to $172 million at September 30, and most of those bad debts were from loans to farmers.

Possibly, BNZ is trying to influence public opinion while the Commerce Commission has an ongoing inquiry into whether the four major Australian-owned banks are making excessive profits.

For the year ended September, net profit was up 6.7% to $1.51 billion.

However, NAB's commentary showed BNZ's net interest margin (NIM) eased to 2.27% in the second half from 2.36% in the first half and compared with 2.48% for the 2022 financial year.

That still made BNZ, which accounted for 18% of NAB's annual cash earnings, one of the Australian bank's more profitable subsidiaries because the group NIM was a much skinnier 1.71% in the second half, down from 1.77% in the first half.

The NIM figures BNZ reported were slightly different – 2.36% in the second half and 2.45% in the first half.

“Challenging economic conditions have impacted business and household confidence and this has flowed through into BNZ's result in the second half of the year,” Huggins said.

The results showed mortgages account for 56% of BNZ's total lending, up from 55% in September 2022, while it lent 49% of the book in Auckland, 11% in Wellington and 10% in Christchurch.

Lending to investors was slightly lower at 33.7% of the book compared with 33.8% a year earlier, while interest-only loans accounted for 17.7% of the book at Sept 30, up from 17.5% at both March 31 and Sept 30 last year.

But only 0.02% of the book was impaired, although that was double the 0.01% a year ago, and 0.17% of the book had payments more than 9 days past due, up from 0.11% a year earlier.

BNZ's KiwiSaver funds under management grew 17%, or by $733 million.

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