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Finance Minister Bill English has announced that New Zealand’s government guarantee for wholesale bond issues by banks will end on April 30, following the end of a similar Australian guarantee from March 31.

The guarantee was used by New Zealand’s banks to issue NZ$10.3 billion worth of bonds under 24 guarantee certificates. There have been no payouts and the guarantee fees earned the government NZ$290 million in fees, English said.

The guarantee was set up in November 2008 in the middle of the financial crisis after Australia’s government set up a similar scheme.

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BNZ has gone looking for money overseas and succeeded, raising EUR 750 million through a seven year eurobond. At current exchange rates, this is equivalent to more than NZ$1.5 billion.

This issue is expected to cost the bank bank-bills-plus-150 bps, which it will probably feel satisfied with, given the seven year term.

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ANZ has released its New Zealand branch General Disclosure statement for the three months to December 31, reporting a 52% increase in net profit to NZ$253 million from the same period a year ago. ANZ, which also owns National Bank in New Zealand, reported a fall in provisions for bad debt and flat costs over the quarter.

ANZ New Zealand Chief Executive Jenny Fagg said the New Zealand economy had stabilised and would slowly gather pace over the next year or two, which would help drive a significant improvement in ANZ’s business performance.

“We are encouraged by the lift in profit in the December 2009 quarter compared with the September quarter, in line with signs of recovery in the broader economy following the recession,” Fagg said.

“Provision trends are moderating. A key improvement in the December 2009 quarter is the pronounced reduction in provisioning for credit impairment which has decreased from $351 million (September quarter) to $151 million.”

Here is the full ANZ release below.

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Home loan approvals worth NZ$710.5 million were granted by banks in the week to February 19, which was down 25% from the equivalent week a year ago, Reserve Bank data shows.

Approvals in the 13 weeks to February 19 were down 12.6% from the same period a year ago, which was an acceleration in the fall from the 8.7% decline seen for the 13 weeks to February 12, the data shows.

This data suggests banks are being more cautious about lending to home buyers and/or home buyers are being more cautious about buying. The Mexican Standoff in the housing market is solidly in place as listings rise sharply while sales volumes are down sharply.

Banks face growing international regulatory restrictions on their ability to leverage shareholder capital and a tightening of Reserve Bank rules on their ability to find cheap short term funds offshore.

Kiwibank CEO Sam Knowles has queried the Reserve Bank’s decision to move ahead of the rest of the world to introduce prudential liquidity rules that are forcing the big 4 Australian owned banks to raise more funds from retail depositers here, pushing up the cost of funds for Kiwibank.

Until late last year Kiwibank was able to raise all its funds from local depositers, but intense competition from other banks for retail deposits and Kiwibank’s own strong lending growth rate forced it to raise NZ$309 million in longer term funds from the Australian bond markets last year.

“The new Reserve Bank rules are forcing us to go offshore,” Knowles told a news conference after releasing first half results showing an 8% fall in profits despite a 27.4% growth in assets. Kiwibank’s ratio of net interest income as a percentage of average total assets fell to 1.4% from 1.8% the previous year as it was forced to pay higher rates for local deposits and pay higher rates for foreign longer term debt.

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Kiwibank has reported a 9% fall in first half profit to NZ$23.5 million as its bad debt provisions rose 26% and its margins were squeezed by the need to go offshore for funding.

See the full Kiwibank result beneath. I will report with more detail after a briefing I’m attending in Wellington.

Kiwibank has declared a profit of $23.5 million after tax for the six months ended December 31, 2009. This compares with a profit after tax of $25.8 million for the same period in 2008, a reduction of 9%.

Kiwibank Chief Executive Sam Knowles described the result as “a strong performance in a very difficult financial environment”.

In the six months from July 1, 2009 to December 31, 2009:
• Total lending (home loans, business banking and credit cards) increased 15% from $8.5 billion to $9.8 billion
• Retail deposits increased 3% from $6.7 billion to $6.9 billion

The bank has increased provisions for bad debts from $12.2m to $15.4m.

Mr Knowles said the performance of Kiwibank had been recognised internationally with the award of the coveted New Zealand Bank of The Year by the London-based The Banker magazine and best value bank by Canstar and the Sunday Star Times for the fourth year in a row.

The bank successfully raised $NZ309 million through a bond issue in Australia as Mr Knowles said it looked to widen its funding base for domestic residential lending.

In the promotion area, Kiwibank entered its first major sponsorship with the launch of the New Zealander of the Year Awards and also created a youth website, Kiwi Connector, providing information, competitions and music.

Mr Knowles said the Kiwibank PIE Unit Trust had continued to grow strongly [over the period]. “We now have almost 25% of the registered bank cash PIE market in New Zealand”.

Mr Knowles said the bank continued to build on its small and medium business banking base which he described as “one of the strong pillars of the bank”.

The bank also launched a new credit card range in association with Air New Zealand where customers can earn airpoint dollars able to be used for air travel and get access to cheap flights.