ANZ New Zealand posted an 8% rise in first quarter profit with gross lending increasing 5% and customer deposits rising 7%.
The bank's unaudited net profit after tax rose $32 million, or 8%, to $425 million for the three months to December 31, 2014 from $393 million in the same period of the previous year.
The bank's net interest income rose $29 million, or 4.2%, to $717 million, and its total operating income increased $39 million, or 4.2%, to $969 million. Total operating expenses rose a little slower, by $12 million, or 3.2%, to $384 million.
Having recorded a write-back of $19 million in the December quarter of 2013, ANZ NZ had a $13 million provision for credit impairment in the December quarter of 2014, a turn around of $32 million.
"Continuing confidence in the New Zealand economy is seeing a lift in economic activity, reflected in increased lending. This has resulted in improved profit before credit impairment," ANZ NZ says.
The bank's home loan book grew a net $881 million, or 1.5%, in the December quarter to just under $60.7 billion. The 1.5% growth was ahead of housing lending growth of 1.2% for the quarter in Reserve Bank sector credit data. At December 31 the percentage of ANZ NZ's home loan book at loan-to-value ratios above 80% fell to 14.81%, equivalent to $8.991 billion, from 15.51% at September 30.
Gross lending rose $1.63 billion, or 1.54%, to $107.7 billion. Term deposits dropped $557 million, or 1.6%, to $34.201 billion.
In an ANZ Group announcement the bank said its New Zealand unit was performing strongly, delivering balance sheet growth with market share steady in the competitive mortgages market and deposit growth also strong.
"Ongoing benefits from the brand and systems merger continue to contribute to positive income expense jaws and the credit environment remains benign," the ANZ Group said of New Zealand.
The ANZ Group posted a 3.5% rise in first quarter unaudited cash profit to A$1.79 billion. CEO Mike Smith said 2015, as expected, was proving a slightly tougher, more volatile environment. Nonetheless ANZ still expects its dividend payout ratio to remain at the upper end of its target range this year, which is between 65% and 70% of cash profit.
The ANZ Group's net interest margin fell 6 basis points from the end of the second half of its 2014 financial year, when it came in at 2.12%. The group attributed 2 basis points of the drop to foreign exchange translation impacts, with the rest "largely attributable" to global markets operations and the impact of higher liquidity requirements.
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