ANZ lightened reliance on advisers in the March half year

ANZ Bank New Zealand’s reliance on advisers to originate mortgages fell slightly to 59% of net new lending in the six months ended March 31 compared with 61% in the previous first half.

The bank’s Australian parent’s slides showed that 52% of its total mortgage book was originated by advisers at March 31, up from 51% a year earlier and from 48% two years earlier.

The slides also showed that a net 35% of new lending was at variable rates, up from 10% in the previous first half, meaning that at March 31, 12% of total loans were on variable rates compared with 11% a year earlier.

On Wednesday, the Reserve Bank noted that more borrowers coming off fixed terms have opted to remain on floating rates or very short-term fixed periods because they expect further cuts in the official cash rate (OCR), currently at 3.5%.

Economists expect RBNZ to cut the OCR to 3.25% later this month after cutting from 5.5% since August last year.

ANZ NZ chief executive Antonia Watson said that fixed-term mortgage rates have dropped by more than the OCR, “providing some relief for home loan customers.”

However, RBNZ said the weighted average mortgage rate peaked at 6.4% last year and has since come down only slightly to 6.2%.

Watson said by the end of this year, about 80% of customers with a fixed rate higher than 6% will roll off onto lower rates.

“These borrowers could potentially see 100-basis points or more coming off their home loans when they refix. For someone with a $500,000 loan, this could mean monthly savings of around $260 in repayments,” she said, noting that in the last three months, customersrefixing at lower rates have kept their repayment amounts steady or increased them.

“Almost 40% of home loan customers are ahead on their repayments by six months or more and 45% have a savings buffer of $5,000 or more in place,” Watson said.

The disclosure statement for the ANZ NZ branch, which should cover the entire NZ activities of ANZ, showed the bank increased mortgage lending by a net $2.28 billion in the second half, accounting for 23.8% of net new bank lending, according to RBNZ data.

That was a step up from the $1.57 billion ANZ lent on net new mortgages in the six months ended September last year, although the percentage of net new bank lending was the same at 23.8%.

That’s lower than ANZ NZ’s market share, which its parent put at 30.2% at March 31, down from 30.5% a year earlier.

Home loans accounted for 74% of ANZ’s lending in NZ at March 31, up from 72% a year earlier.

Stuart Smith, the former chair of parliament’s finance and expenditure committee, commented last year that ANZ NZ “has been described as a profitable building society.”

ANZ NZ reported a “statutory” net profit of $1.28 billion for the six months ended March 31, up 21% on the previous first half, but this figure didn’t match the figures disclosed in ANZ’s NZ branch or subsidiary disclosure statements.

The branch statement showed net profit of $1.3 billion for the latest six months, up 23.4% while the Australian parent reported a 16% increase in statutory net profit to A$3.64 billion.

ANZ NZ said it wrote back $5 million of previous charges against profits compared which a charge of $33 million in the previous first half, figures matched by the branch disclosure statement.

The NZ release said net interest margin (NIM) rose by three basis points in the latest six months, saying improved home loan margins had offset lower term deposit margins, but didn’t provide figures for actual NIM.

The parent’s slides provided only “risk-adjusted” NIM, which was 3.71% in the latest six months, the same as in the previous first half but down from 3.84% in the second half of last year.

The NZ bank said its loss rate on home loans was nil and that lending to investors rose to 24% of net new lending from 19% in the previous first half, but that investors accounted for 22% of the total mortgage book at March 31, down from 23% a year earlier.